SDLT for non-uk residents - SURCHARGE QUESTION

thenap80

I live abroad so not in UK. 
I used to have a house that I let out in UK but I sold that two years back. Ive been away for 5 years. 
I want to buy a new house in UK to move back soon.325k house. 
I can see that I have to pay a surcharge for being a non UK resident but might be able to reclaim that if i do move back. 
But there is another surcharge for additional properties - and I cant work out if this is apples to me. I own no other property but does renting a place where I currently livce in Switzerland, make the purchase of any property a second home, especially if I dont move bacmk into a place I buy straight away. 

So thankful for help as I cant fathom it using the websites Ive been looking at. 

_Penny_Dreadful

thenap80 said:

I live abroad so not in UK. 
I used to have a house that I let out in UK but I sold that two years back. Ive been away for 5 years. 
I want to buy a new house in UK to move back soon.325k house. 
I can see that I have to pay a surcharge for being a non UK resident but might be able to reclaim that if i do move back. 
But there is another surcharge for additional properties - and I cant work out if this is apples to me. I own no other property but does renting a place where I currently livce in Switzerland, make the purchase of any property a second home, especially if I dont move bacmk into a place I buy straight away. 

So thankful for help as I cant fathom it using the websites Ive been looking at. 

I'm assuming you're buying in England where SDLT is the applicable tax.  

Four conditions must be met for the higher rate of SDLT for the purchase of residential properties to apply.

• Condition A - the chargeable consideration is £40,000 or more

• Condition B - the major interest purchased is not subject to a lease which has more than 21 years to run on the date of purchase

• Condition C - the purchaser owns a major interest (with a market value of £40,000 or more) in another dwelling which is not subject to a lease which has more than 21 years to run at the date of purchase of the new dwelling, and
• Condition D - the dwelling being purchased is not replacing the purchaser’s only or main residence.

From what you describe I don't see how all four conditions would apply to your situation.

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09730

thenap80

Thanks for that reply. 
Condition D is a ht and miss for me at moment as I may buy it and not move back - alternatively let my brother live there for time being. 
But condition C - I am married and my wife owns a flat in UK - all in her name as it was hers before she met me. But being married, do you think or know if that means I have a 'major interest'. The deeds I guess would be in her name. 

_Penny_Dreadful

thenap80 said:

Thanks for that reply. 
Condition D is a ht and miss for me at moment as I may buy it and not move back - alternatively let my brother live there for time being. 
But condition C - I am married and my wife owns a flat in UK - all in her name as it was hers before she met me. But being married, do you think or know if that means I have a 'major interest'. The deeds I guess would be in her name. 

Based on the HMRC manual I don't see how condition D is hit or miss.  You don't currently own your main residence, you rent it.  The property you used to own you hadn't lived in for 5 years so you don't meet the condition of replacing your main residence.

Your wife owning a property, if it's worth more than £40,000, will mean the higher rate of SDLT applies to your purchase because you'll be counted as a single economic unit for the purposes of SDLT and condition C will be met.

thenap80

sorry to come back with a question - you  are great...
Condition D though. Even if I rent in Switzerland then that rented place is my 'main residence' no? And then if I do end up not moving back to UK, condition D is met, would you agree? 

_Penny_Dreadful

thenap80 said:

sorry to come back with a question - you  are great...
Condition D though. Even if I rent in Switzerland then that rented place is my 'main residence' no? And then if I do end up not moving back to UK, condition D is met, would you agree? 

Not according to the definition of "main residence" in the HMRC manual.

user1977

thenap80 said:

sorry to come back with a question - you  are great...
Condition D though. Even if I rent in Switzerland then that rented place is my 'main residence' no? And then if I do end up not moving back to UK, condition D is met, would you agree? 

"Replacing your main residence" here means disposing of your (major) interest in your old residence i.e. selling it. You're not, because you (presumably) only have a short-term lease which is not a "major interest".

Otherwise that exemption would apply to everybody who moved into their additional property when they bought it, which would be a wide-open loophole!

thenap80

user1977 said:

thenap80 said:

sorry to come back with a question - you  are great...
Condition D though. Even if I rent in Switzerland then that rented place is my 'main residence' no? And then if I do end up not moving back to UK, condition D is met, would you agree? 

"Replacing your main residence" here means disposing of your (major) interest in your old residence i.e. selling it. You're not, because you (presumably) only have a short-term lease which is not a "major interest".

Otherwise that exemption would apply to everybody who moved into their additional property when they bought it, which would be a wide-open loophole!

But what if I didnt end up moving back to UK and so did not use it as my main residence? Staying instead in rented accomodation outside of UK ?

user1977

thenap80 said:

user1977 said:

thenap80 said:

sorry to come back with a question - you  are great...
Condition D though. Even if I rent in Switzerland then that rented place is my 'main residence' no? And then if I do end up not moving back to UK, condition D is met, would you agree? 

"Replacing your main residence" here means disposing of your (major) interest in your old residence i.e. selling it. You're not, because you (presumably) only have a short-term lease which is not a "major interest".

Otherwise that exemption would apply to everybody who moved into their additional property when they bought it, which would be a wide-open loophole!

But what if I didnt end up moving back to UK and so did not use it as my main residence? Staying instead in rented accomodation outside of UK ?

Whether you use the new property as your residence or not makes no difference to the SDLT, if that's your question?

thenap80

user1977 said:

thenap80 said:

user1977 said:

thenap80 said:

sorry to come back with a question - you  are great...
Condition D though. Even if I rent in Switzerland then that rented place is my 'main residence' no? And then if I do end up not moving back to UK, condition D is met, would you agree? 

"Replacing your main residence" here means disposing of your (major) interest in your old residence i.e. selling it. You're not, because you (presumably) only have a short-term lease which is not a "major interest".

Otherwise that exemption would apply to everybody who moved into their additional property when they bought it, which would be a wide-open loophole!

But what if I didnt end up moving back to UK and so did not use it as my main residence? Staying instead in rented accomodation outside of UK ?

Whether you use the new property as your residence or not makes no difference to the SDLT, if that's your question?

user1977 said:

thenap80 said:

user1977 said:

thenap80 said:

sorry to come back with a question - you  are great...
Condition D though. Even if I rent in Switzerland then that rented place is my 'main residence' no? And then if I do end up not moving back to UK, condition D is met, would you agree? 

"Replacing your main residence" here means disposing of your (major) interest in your old residence i.e. selling it. You're not, because you (presumably) only have a short-term lease which is not a "major interest".

Otherwise that exemption would apply to everybody who moved into their additional property when they bought it, which would be a wide-open loophole!

But what if I didnt end up moving back to UK and so did not use it as my main residence? Staying instead in rented accomodation outside of UK ?

Whether you use the new property as your residence or not makes no difference to the SDLT, if that's your question?

sorry to sound thick, but are yopu saying that in that case I would not have to pay higher rate stamp duty. just the normal rate (plus the 2percent for being non resident in UK)????

From HMRC website:
"Where a purchaser previously lived in accommodation which they (or their spouse or civil partner) did not own, then moving out of this accommodation does not count as replacing their main residence for the purpose of Condition D."

So in effect I am not replacing my main residence. And so that ticks condition D. 

user1977

You are not replacing your main residence anyway because you're not selling a main residence. So whether the new place is a main residence or not is irrelevant, you're still paying the higher rate.