A 2% stamp duty land tax (SDLT) surcharge now applies to transactions of residential property in England and Northern Ireland, for non- UK residents. The new surcharge came into effect on 1st April 2021.
The surcharge applies to purchases of freehold and leasehold property, as well as increasing the SDLT on rents on the grant of a new lease.
The surcharge is applied in addition to other rates, including the dwelling supplement and the 15% higher rate for companies.
Stamp duty land tax rates where the surcharge applies:
- First-time buyer residential SDLT rates
- Standard residential SDLT rates
- Higher 3% residential SDLT rates (also known as the additional dwelling supplement)
- Higher 15% SDLT rate for companies
- SDLT rate that applies to rent
The surcharge applies where a non-UK resident buys a major interest in a freehold residential property for £40,000 or more.
In relation to a leasehold residential property, the surcharge applies for non-UK residents if:
- the lease premium is £40,000 or more, or the rent is £1,000 or more
- one or more buyer is non-UK resident
- the major interest being acquired is not a lease with 7 years or less to run
Buyers need to apply the SDLT residence test to establish if they are a non-UK resident, for the purpose of the transaction.
Buying with someone else
The rules apply to each person, whether they are a business or individual buying the property. If one person is a non-UK resident, then all buyers will be treated as non-UK residents for the purpose of the transaction.
Individuals
Individual buyers are classed as non-UK resident, for the purpose of the transaction, if they are not present in the UK for at least 183 days during the 12 months before the purchase.
Married or in a civil partnership
For those buying a property together, as long as they are not separated and neither is acting as a trustee of a settlement, if one person is a UK resident then both people will be treated as UK residents, for the purpose of the transaction.
Companies
Corporate buyers are treated as non-UK resident if they are not a UK resident for Corporation Tax purposes, at the date of the transaction.
A full list of the SDLT residence test can be found on the government website.
