HMRC SDLT: SDLTM09960A – SDLT – increased rates for non-resident transactions: Completion and amendment of land transaction return where an individual becomes UK resident after return delivered – Effect of rules applying to spouses and civil partners of UK residents
Principles and Concepts of SDLT Increased Rates for Non-Resident Transactions
This section of the HMRC internal manual provides guidance on the Stamp Duty Land Tax (SDLT) increased rates for non-resident transactions. It covers the completion and amendment of land transaction returns when an individual becomes a UK resident after the return is delivered, and the effect of rules applying to spouses and civil partners of UK residents.
- Guidance on SDLT increased rates for non-residents.
- Instructions for amending land transaction returns.
- Rules for UK residents’ spouses and civil partners.
SDLT Increased Rates for Non-Resident Transactions
This article discusses the rules surrounding Stamp Duty Land Tax (SDLT) increased rates for non-residents, particularly in situations where an individual becomes UK resident after the SDLT return has been submitted. It also covers how these rules affect spouses and civil partners.
Overview of SDLT and Non-Residents
When a non-resident purchases property in the UK, they are typically subject to higher rates of SDLT. This surcharge can be significant, sometimes adding thousands of pounds to the cost of a property. However, if the purchaser becomes UK resident after submitting their SDLT return and payment, there are provisions that allow them to claim a refund of this extra charge.
Residence Test
To determine whether an individual is considered a UK resident, HMRC uses a specific set of rules, known as the residence test. If an individual meets these criteria after the SDLT return is filed, they may be eligible for a refund of the non-resident surcharge.
Refund Eligibility
– If a purchaser who initially qualifies as a non-resident becomes a UK resident after the SDLT return is submitted, they can claim a refund of the surcharge.
– The eligibility for a refund directly relates to meeting the residence test outlined in paragraph 4(1).
Special Rules for Spouses and Civil Partners
In cases where one spouse or civil partner is non-resident and the other is a UK resident, special rules apply. Specifically:
– If one partner meets the residency criteria but the other does not, the non-resident partner may still be treated as a UK resident for the purposes of the property transaction.
– This is specifically noted in paragraph 12 of the guidelines.
Example Scenario
To illustrate these rules, consider the following example:
– Caroline and Alaric live in Malta and decide to purchase a freehold residential property in England. They complete the purchase on 1 September 2022 for a price of £675,000.
– Between 1 September 2021 and 31 August 2022, neither Caroline nor Alaric spent any days in the UK. Therefore, both are classified as non-UK residents regarding this property purchase.
– On 1 December 2022, both Caroline and Alaric move to the UK. Alaric stays in the UK from that date until 30 August 2023, while Caroline goes back to Malta on 1 May 2023.
– During the period from 1 September 2022 to 31 August 2023, Alaric spends a total of 183 days in the UK, meeting the threshold for UK residency.
– Since Caroline and Alaric were living together at the time of the purchase and none of them acted as a trustee of a settlement for the property, Caroline is also considered a UK resident due to the special rules applying to spouses and civil partners.
As a result of both Caroline and Alaric now being UK residents, they can amend their original SDLT return to claim a refund of the non-resident surcharge they initially paid.
How to Claim a Refund
To claim a refund, the following steps should be taken:
1. Identify Eligibility: Confirm that both you and your partner meet the residency requirements as outlined in the residence test.
2. Amend Your SDLT Return: You will need to amend your original SDLT return. This process involves submitting a new, corrected return to HMRC.
3. Submit the Claim: Ensure you follow HMRC’s specified procedures for submitting the amended return, including any necessary documentation to support your claim.
4. Await Refund Processing: After submission, monitor the status of your refund claim through your HMRC account or by contacting them directly if necessary.
Important Considerations
– Always check for updates to the rules and guidelines, as tax legislation can change. Keeping abreast of any changes ensures your understanding remains current.
– Consult a tax professional if you are unsure about your residency status or how to complete the SDLT return and amendment process.
– Be mindful of deadlines for submitting amendments as late submissions may lead to a forfeiture of the refund eligibility.
Conclusion on SDLT Refunds
Overall, understanding the implications of becoming a UK resident after purchasing a property is crucial for property buyers. Both couples and individuals should carefully assess their residency status, particularly when navigating the complexities of SDLT and its regulations.
By being aware of their rights and processes for claiming refunds, individuals can avoid unnecessary financial burdens while properly complying with tax regulations. For further details and guidance, refer to the link provided or consult with a tax expert.
Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: SDLTM09960A – SDLT – increased rates for non-resident transactions: Completion and amendment of land transaction return where an individual becomes UK resident after return delivered – Effect of rules applying to spouses and civil partners of UK residents
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