HMRC SDLT: SDLT Surcharge Rules for Non-Resident Spouses and Civil Partners Explained
SDLT Increased Rates for Non-Resident Transactions: Spouses and Civil Partners
This guidance explains the conditions under which non-UK resident spouses or civil partners are treated as UK residents for the purposes of Stamp Duty Land Tax (SDLT) surcharges. This applies to transactions involving joint purchasers where at least one is a UK resident and the other is not, provided they are living together and not acting as trustees.
- For transactions with joint purchasers, if two are spouses or civil partners, the non-UK resident is treated as UK resident for SDLT purposes.
- This treatment applies if the spouses or civil partners are living together on the transaction’s effective date.
- Section 1011 of the Income Tax Act 2007 defines conditions under which spouses or civil partners are considered living together.
- Even if one spouse or civil partner becomes UK resident after the transaction date, the rule still applies.
- An example illustrates that if all purchasers are treated as UK residents, the surcharge does not apply.
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Read the original guidance here:
HMRC SDLT: SDLT Surcharge Rules for Non-Resident Spouses and Civil Partners Explained
Understanding SDLT and Increased Rates for Non-Resident Transactions
Overview
This section discusses the Stamp Duty Land Tax (SDLT) rules which apply to certain property transactions involving non-UK residents. Specifically, it explains the circumstances under which a non-UK resident spouse or civil partner can be treated as a UK resident for the purpose of SDLT charges.
Key Principles
The rules are important for situations where multiple purchasers are involved in a property transaction. The application of the rules depends on several conditions regarding the residency status of the purchasers and their relationship.
Conditions for Treating a Non-Resident as UK Resident
When there are two or more purchasers involved in a property transaction, the following conditions determine how the non-UK resident spouse or civil partner is treated for SDLT purposes:
– At the time of the transaction, at least two of the purchasers are spouses or civil partners.
– Those spouses or civil partners are living together.
– At least one of them is a UK resident regarding this transaction.
– At least one of them is a non-UK resident regarding this transaction.
– Neither is acting as a trustee of a settlement.
If all these conditions are met, the non-UK resident spouse or civil partner will be treated as UK resident for the transaction.
Residency Status and Living Together
To assess if spouses or civil partners are ‘living together,’ we refer to Section 1011 of the Income Tax Act 2007. According to this section, the following situations indicate that they are not living together:
– They are separated by a court order.
– They are separated by a legal deed.
– They are separated in a way that suggests the separation is likely permanent.
If none of these conditions is met, they are considered to be living together.
Example Scenario
To illustrate how these rules work, let’s look at an example involving three individuals:
Example:
Thierry, Diego, and Katie are all living in the USA. They decide to jointly purchase a freehold residential property in Northern Ireland on 1 June 2025 for a price of £950,000.
– Between 2 June 2024 and 1 June 2025:
– Thierry spent 183 days in the UK.
– Diego also spent 183 days in the UK.
– Katie spent a total of 100 days in the UK. However, these days were not within a continuous 365-day period, which means she does not qualify as a UK resident under normal SDLT rules.
Now, let’s evaluate the situation:
– On 1 June 2025, Thierry and Katie are married and living together.
– Neither Thierry nor Katie acted as a trustee concerning this property purchase.
Since one spouse is already deemed a UK resident (Thierry in this case) and the spouses are living together, under the rules, Katie is treated as a UK resident for this transaction despite her non-resident status based on the number of days spent in the UK.
As a result, all three purchasers—Thierry, Diego, and Katie—are considered as UK residents regarding this transaction. Therefore, the property purchase is not subject to the additional SDLT surcharge for non-resident purchases.
Key Takeaways
– Multiple purchasers can include non-UK residents, but specific conditions will dictate their SDLT treatment.
– The living arrangements of spouses or civil partners play a significant role in determining their residency for tax purposes.
– Individual days spent in the UK are critical for assessing residency status, especially in relation to SDLT rules regarding non-resident purchasers.
When Changes Occur
If the residency status of one spouse or civil partner changes after the effective date of the transaction, the previously mentioned regulations still apply. This means that:
– If a non-UK resident spouse or civil partner becomes a UK resident after the transaction, it won’t alter the initial treatment for SDLT purposes at the time of the transaction.
Further Resources
For more detailed information, reference the official guidance on SDLT increased rates for non-resident transactions here: SDLTM09885 – SDLT – increased rates for non-resident transactions: Spouses and civil partners of UK residents – para 12 Sch 9A FA03.
Understanding these regulations is essential for anyone involved in property transactions in the UK, especially those with international ties.
Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: SDLT Surcharge Rules for Non-Resident Spouses and Civil Partners Explained
