The Government has published legislation that will introduce an extra 2% Stamp Duty surcharge for overseas buyers of property in England and Northern Ireland from April 1 2021.
It will apply to overseas buyers unless they spent 183 days in the UK over any 365-day period beginning 12 months before the transaction and ending 12 months after.
This is different to the UK’s statutory residency test which is based on how much time is spent in the country during a tax year.
Where contracts are exchanged prior to March 11 2020 but complete or are substantially performed on or after April 1 2021, transitional rules may apply, the Government said.
Transitional rules may also apply where a contract is substantially performed on or before March 31 2021 but does not complete until April 2021 or later, the guidance said.
Overseas purchasers who are first-time buyers can still use the Stamp Duty exemption up to £300,000 but must pay the surcharge.
An impact statement from the Treasury said: “This measure may help to control house price inflation, by leading to a reduction in residential property purchases by non-UK residents, some of which is offset by an increase in purchases by UK residents.
“This measure will affect individuals who will be required to consider their residence status when purchasing a residential property.
“Most individuals will be clear as to their residence status for the purposes of Stamp Duty but some individuals with more complex affairs or who have regular periods in and out of the UK may require additional advice and incur additional costs in determining their tax liability.
“Where individuals pay the surcharge but then satisfy the residence conditions in the 12 months following the transaction, they may be entitled to a refund.”