29 November 2023
The non-resident Stamp Duty Land Tax (SDLT) surcharge is a 2% SDLT surcharge for overseas buyers, which was introduced for residential property transactions with an effective date on or after 1 April 2021. The surcharge applies to non-UK resident individuals, companies, and other entities involved in residential property transactions in England and Northern Ireland.
UK residence – company
A company is a UK resident for the purposes of the surcharge if it is UK resident for the purposes of corporation tax. A company is UK resident for corporation tax purposes if either:
- It is incorporated in the UK.
- Its central management and control is in the UK.
A company can also be considered to be a non-resident, even if the company is UK-resident for the purposes of corporation tax, but it:
- is a close company
- meets the non-UK control test in relation to the transaction
- is not an excluded company.
The “special rule” applies to non-individual purchasers. Under the special rule, a purchaser is treated as a UK resident if they are present in the UK on at least 183 days during the period commencing with the day that is 364 days before the effective date of the transaction and ending on the effective date. Unlike the basic rule, this test looks only at the position on the effective date, and not at the residence of the individual thereafter.
Establishing the residency of a non-individual purchaser can be a complex matter, so please seek specialist advice if the position is unclear.
UK residence – individual
An individual is a UK resident under the basic rule if they are present in the UK on at least 183 days in a continuous 365-day period. This period is beginning with the day that is 364 days before the effective date of the transaction and ending with the day that is 365 days after the effective date (relevant period).
The surcharge rate is 2% above the standard SDLT rates. This means that if you are a non-resident purchasing a residential property, you would pay either the standard SDLT rates or the higher SDLT rates plus an additional 2%.
Some exemptions and reliefs exist. For instance, the surcharge generally does not apply to Crown employees, certain international organis
zations, or properties acquired for certain purposes, such as for communal housing.
If a property is purchased jointly, and at least one of the purchasers is a non-resident, the surcharge applies to the entire transaction.
Jane is from the United States. She has decided to purchase a residential property in London in addition to a home she already owns in New York. The residential property in London that Jane is purchasing costs £2,000,000. She plans to use the property as a holiday home.
To determine whether the non-resident surcharge on SDLT will impact her, Jane needs to determine her SDLT residency status by calculating the number of days she spent in the UK over the 12 months leading up to the transaction.
She calculated that she spent 190 days in the UK in the year prior to the effective date. Since she met the 183-day residency requirement, she is considered a resident for the purposes of the SDLT surcharge.
The table below sets out the relevant rates and SDLT due if the non-resident surcharge applies (or does not apply) to the higher rates applicable to additional dwellings (which is payable as Jane already owns a residential property in New York):
|Purchase price bands (£)
|Taxable sum (£)
|SDLT due (£)
|HRAD & non-resident surcharge %
|SDLT due (£)
|Up to 250,000
|Above 250,000 and up to 925,000
|Above 925,000 and up to 1,500,000
|Total SDLT due
The non-resident surcharge would therefore have increased Jane’s total SDLT by £40,000 if she had not been deemed resident in the UK for SDLT purposes.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at November 2023.