SDLTM09905 | SDLT - increased rates for non-resident transactions: Non-resident in relation to a chargeable transaction: Companies, first condition - para 7(2) Sch 9A FA03

For the purposes of the surcharge, a company is non-resident in relation to a chargeable transaction if on the effective date of the chargeable transaction, the company is non-UK resident for the purposes of the Corporation Tax Acts.

The company residence rules are set out in Chapter 3 of Part 2 of the Corporation Tax Act 2009. Generally speaking, a company is resident in the UK for the purposes of Corporation Tax if it is incorporated in the UK (with certain exceptions), or the central management and control of its business is in the UK. More information on the company residence rules can be found at INTM120000 onwards.

Example 1

Crescent Ltd was incorporated in the UK on 1 December 2020. Its registered office address is in Wales. On 1 December 2021, Crescent Ltd purchases a freehold residential property in England for £124,000. Crescent Ltd is UK resident in relation to the transaction.

Example 2

Labonair Ltd was incorporated in the Dominican Republic on 1 December 2020, where its main trading operations are located. The controlling board of directors meet weekly in Edinburgh. It is accepted for Corporation Tax purposes that their powers are exercised at those meetings, and the central control and management of the company is in Edinburgh.

On 1 December 2021, Labonair Ltd purchases a 999 year leasehold interest in a residential property in England for £700,000. As the central management and control of the company is in the UK, Labonair Ltd is a UK resident company in relation to the transaction.

Example 3

Joliet River Ltd was incorporated in the UK on 1 March 2021, but is dual resident in the UK and Jersey. It is accepted that the company is managed and controlled in Jersey. Therefore, under the “tie-breaker” clause of the Jersey-UK Double Taxation Agreement, Joliet River Ltd is treated as resident in Jersey and “treaty non-resident” (TNR) in the UK for Corporation Tax purposes (see INTM120070 for more information on TNR companies).

On 1 December 2021, Joliet River Ltd purchases a freehold residential property in Northern Ireland for £900,000. Although the company was incorporated in the UK, because it is TNR, Joliet River Ltd is non-UK resident in relation to the transaction.