Proposed 3% increase in Stamp Duty for Non-Residents

[TNW]

I see that the Tories are proposing a 3% increase on Stamp Duty (on top of what would be paid already) for 'foreigners' that want to buy property in the U.K. I get the sentiment to slow down the purchase of London properties by Millionaires from places such as Russia & China. But, as a pretty normal Brit currently living, working and paying tax in the middle of Europe -and looking to come back to the U.K next year for good, it seems I would be treated in the same way when buying a house. I know it's all conjecturer, and would only happen if the Tories get in, but any ideas typically as to how fast this sort of change could happen after the election? We're looking to buy at the moment, but the market is very slow so we're struggling to find anything. Wondering how long we might have left until it might not be economic to come back and we might have to settle somewhere else

[V8mate]

Why would you be treated the same?

If you're British and tick the 'main domicile' box for HMRC when you buy the house, how would you 'appear' any different to the authorities?

[TNW]

Because we would be buying while non-resident and living in another country, in preparation to move back in the summer of 2020. All the reports I can find on this say it would apply to U.K citizens living overseas as well.

[V8mate]

So move back and grab a rental property for six months while buying your home (assuming that is cheaper than 3% of the purchase price)

[NickCQ]

TNW said:

Because we would be buying while non-resident and living in another country, in preparation to move back in the summer of 2020. All the reports I can find on this say it would apply to U.K citizens living overseas as well.

Devil will be in the detail of how the policy is drafted, but I'd expect there to be some kind of 'common sense' carve-out (a bit like the additional property charge) where if you permanently shift your domicile to the UK at or shortly after the time of buying the property you can claim it back.

[JulianPH]

Do you remain as a UK tax resident (as well as paying tax in Europe)?

This is quite possible, for example if you have something as simple as a UK deposit account where tax is deducted at source.

This new potential rule is not at all aimed at "foreigners", simply non-UK-taxpayers.

I understand this can have ramifications though.



As usual, edited when read back for a stupid typo!

Edited by JulianPH on Friday 22 November 18:56

[MrArrow]

It is my understanding that under existing EU rules this would be illegal, meaning that it can only be put into force after the Brexit transition period has been completed.

[jeff m2]

I've been out of UK for a while, but I thought an overseas buyer would normally purchase a UK investment property using an offshore corp as a wrapper.
Meaning that the offshore company is bought and sold, the property remains within the wrapper and does not change ownership hence does not attract attention.
Maybe doing something about getting the regular stamp duty first.

[ninja-lewis]

jeff m2 said:

I've been out of UK for a while, but I thought an overseas buyer would normally purchase a UK investment property using an offshore corp as a wrapper.
Meaning that the offshore company is bought and sold, the property remains within the wrapper and does not change ownership hence does not attract attention.
Maybe doing something about getting the regular stamp duty first.

If it's an UK dwelling valued over £500,000 and owed by a company then the Annual Tax on Enveloped Dwellings applies.

https://www.gov.uk/guidance/annual-tax-on-envelope...

[jeff m2]

ninja-lewis said:

jeff m2 said:

I've been out of UK for a while, but I thought an overseas buyer would normally purchase a UK investment property using an offshore corp as a wrapper.
Meaning that the offshore company is bought and sold, the property remains within the wrapper and does not change ownership hence does not attract attention.
Maybe doing something about getting the regular stamp duty first.

If it's an UK dwelling valued over £500,000 and owed by a company then the Annual Tax on Enveloped Dwellings applies.

https://www.gov.uk/guidance/annual-tax-on-envelope...

This was regarding stamp duty on a sale (or non sale )

[emicen]

TNW said:

I see that the Tories are proposing a 3% increase on Stamp Duty (on top of what would be paid already) for 'foreigners' that want to buy property in the U.K. I get the sentiment to slow down the purchase of London properties by Millionaires from places such as Russia & China. But, as a pretty normal Brit currently living, working and paying tax in the middle of Europe -and looking to come back to the U.K next year for good, it seems I would be treated in the same way when buying a house. I know it's all conjecturer, and would only happen if the Tories get in, but any ideas typically as to how fast this sort of change could happen after the election? We're looking to buy at the moment, but the market is very slow so we're struggling to find anything. Wondering how long we might have left until it might not be economic to come back and we might have to settle somewhere else

First I’ve heard of this policy to be honest, actually quite surprised it’s been tabled by the Tories before the others jumped on it.

If the intention was genuinely to quell overseas investors hoovering up stock, it would be a lot higher than 3%. Really this is just tinkering round the edges for easy pocket money and sound bites of tackling the issue.

In Singapore for example, on a $1m property, a single person with no other property in Singapore would have the following stamp duties:
Singaporean = $24,600
Permanent resident = $74,600 (5% additional buyer stamp duty)
Foreigner = $224,600 (20% additional buyer stamp duty)