From the 1st of April 2021, anyone looking to buy a property in the UK from overseas, will be subject to a 2% surcharge. Any purchase on a residential leasehold or freehold property by a non resident or by an unmarried couple,  where one of them is a UK resident, is subject to the surcharge. The exceptions include Crown employees and married couples, where one of them is a UK resident.

 

Many presumed this would deter buyers from investing in the UK, but in reality it has done little to halt the influx of interest from abroad. As with most things, there are legal loopholes that enable buyers to either reduce their payment or claim it back. Below is an outline of some of the different ways buyers can reclaim.

When doesn’t the surcharge apply

If buyers exchanged contracts before the 11th of March 2020 and the vast proportion of funds has been paid or the buyer has taken occupancy on or after the 1st of April.

How to reclaim the surcharge

• BECOME A RESIDENT 

To reclaim the 2% surcharge via tax return, you must live in the UK for at least 183 consecutive days, within two years of the purchase. This must be carried out either 364 days before the purchase date or within 365 days after it. 

It’s also important to be able to show proof of residency during this time, so hold on to any bank statements, council tax, mobile bills etc

• BUY IN BULK

If you buy 6 or more properties the surcharge doesn’t apply but the stamp duty you pay will be based on the average purchase price of the properties.

Alternatively you could buy land, a commercial property or look at improving welfare by purchasing a school, student digs or a care home. 

 

For most though, the new UK surcharge is an additional fee on top of the typical Stamp Duty owed on residential properties and second homes.  However, if you are looking at becoming a resident, now couldn’t be a better time, to put in the time.