Taxation of Non-UK Domiciliaries - Finance (No 2) Act 2017, Finance Act 2018 Schedule 10

7 Dec 2020

The draft regulations have been circulated to the CIOT Property Taxes Committee and to STPG members. There were no comments on the additional questions to be included in the SDLT 1. However, we suggest the questions in the new SDLT return should invite those completing the return to read the guidance. Otherwise, many of those completing the return will answer the questions (e.g. Are any of the purchasers a UK resident close company controlled directly or indirectly by a non-UK resident?) without reading the guidance and are likely to answer the questions incorrectly.


Both the CIOT and the STPG, in their responses to the consultation on the draft legislation for the non-resident surcharge, expressed strong concerns about the disproportionate complexity of the non-UK control test based on the close company legislation. This concern is echoed in the tax information and impact note. It will be essential the SDLT return guidance provides comprehensive guidance on how that test is applied as well as guidance on the simplified test of residence for individual purchasers.

It is also suggested that sections of the existing SDLT return guidance in respect of partnerships and trusts could be expanded for the introduction of the surcharge. There is a risk that system users who are not experienced in SDLT mis-understand who the purchaser is from a SDLT perspective. There can be confusion in how the return is completed when dealing with partnership or trust purchasers. This confusion may not have a material consequence now if incorrect. However, where there are partnership or trust purchasers and the 2% surcharge is potentially applicable, it will be important that the purchaser information is accurately completed.

For trustees, we suggest the guidance needs expanding to make it clear when the trustee is, and is not, the purchaser from an SDLT perspective (a non-UK resident individual who is the beneficiary of a bare trust with UK trustees would be the 'purchaser' whereas where a non-UK resident individual is the beneficiary of a settlement trust with UK trustees, the UK trustees will be the 'purchaser').

In relation to partnerships, the 'purchaser' guidance could be helpfully expanded to include a reminder that where the purchaser is a partnership, it is the partners details which are needed, rather than say the details of a UK limited partnership (which could have non-resident partners).

The current SDLT return guidance is based on the paper SDLT return forms not the online form. This makes the guidance difficult to follow as the online return does not match the paper return. Given that most SDLT returns are completed online, it would make completing the online form much easier if the guidance matched the online return.

Changes to the return

If changes are to be made to the return, a sensible further change would be to add boxes for each of the Year 1 to Year 5 rents for leases on which the NPV is calculated. This information has to be known in any event ‚ but the problem at the moment, with an assigned lease, is that the assignee has to try and back-calculate how the NPV was calculated because the assignor never seems to have the information available whereas they are more likely to have a copy of the SDLT 1.