Property Partnership 2% Stamp surcharge as Overseas buyer?

Property Partnership 2% Stamp surcharge as Overseas buyer?

16:19 PM, 2nd February 2022, About 4 months ago 4

Text Size

Hello all, To explain my situation, I am a UK citizen, but currently living in Hong Kong.

I already have a number of properties in my own name (bought before I left the UK) and am now looking to establish a company with my cousin, who is based in the UK.

I have the money to invest, and he works in the building trade, so there are obvious synergies with this approach.

My concern is that I believe I would be subject to an additional 2% stamp duty surcharge as an overseas buyer, and that this 2% would be applied across the full transaction value (even if my cousin owns 50% of a property).

Whilst I accept that if I purchase a property, I will be subject to the additional stamp duty – it feels unfair of me to expect my cousin to pay the additional stamp duty on his half because of my residence. By the same token, I don’t particularly want to pay a 2% surcharge across the full property value if I am only going to own 50% (as this effectively becomes a 4% surcharge on my half).

I wanted to ask if anyone is aware of anyway of structuring a company, or any other strategies for overcoming this hurdle? My research to date seems to suggest this won’t be possible, as I believe even limited companies are subject to the additional charge if one of the owners of the company is an overseas buyer.

Any advice would be much appreciated!

Chris



Comments

by Alex

16:35 PM, 2nd February 2022, About 4 months ago

Hi Chris

Unfortunately, yes, you are correct.

Finance Act 2021 Schedule 16 provides for an extra 2% SDLT when non-resident buyers buy BTL properties and the definition of non-resident buyers includes UK companies.

A company is non-resident if it is broadly controlled by any number of non-resident individuals. The residency of an individual for the purposes of the surcharge is not determined by the statutory residency test used for other tax purposes. Instead, an individual is resident for the SDLT surcharge test if they have been in the UK for at least 183 days in a 365-day period within which the date of purchase falls.

by steve p

1:28 AM, 3rd February 2022, About 4 months ago

What would happen if the cousin starts a company, op loans money to company. Company buys the properties then op is given or buys 50% of shares in the company?

by Gavin Swinburne

10:29 AM, 9th March 2022, About 3 months ago

When I was looking to start a BTL fund a few years ago, the structure wold be a Limited Partnership investing in a UK limited company which bought properties. This did not incur a 2% surcharge from the advice we bought, although there may be non resident landlord withholding tax on any distributions unless overseas investor registered with HMRC which I assume would not be an issue for you I assume

by Alex

11:40 AM, 9th March 2022, About 3 months ago

Hi Gavin

This change was introduced on 01 April 2021, so if your experience pre-dates that it would no longer be correct.


Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

BECOME A MEMBER

Landlord Tax Planning Book Now