If you are buying a residential property in England or Northern Ireland, and are not a UK resident, you will usually be liable for an additional 2% non-UK resident Stamp Duty Land Tax (SDLT) surcharge that will apply on top of the normal residential SDLT rates.
Which properties are subject to the additional 2% Stamp Duty surcharge?
The surcharge applies to all non-residents buying residential property, even if you intend to live in the property, and regardless of whether you already own a property.
You must pay the surcharge when buying a major interest in a residential property for £40,000 or more:
- Freehold property – any major interest £40,000 or more
- Leasehold property – lease premium of £40,000 or more, or relevant rent of £1,000 or more, provided the lease has more than 7 years to run
A major interest includes freehold or leasehold ownership and undivided shares. Gardens, grounds, and ancillary buildings like garages are included as part of the property.
The surcharge can also apply to off-plan purchases.
It does not apply to non-residential property, mixed-use transactions (unless claiming Multiple Dwellings Relief), or properties in Scotland or Wales.
Who pays the Non-UK Resident Stamp Duty surcharge?
The Stamp Duty surcharge for overseas buyers is based on residence status, not nationality or visa type. It applies to the following buyers:
- Individuals – non-UK residents if not present in the UK for at least 183 days in the 12 months before the transaction
- Married or civil partners – if buying together, and both are non-UK residents, the surcharge applies. If one is a UK resident, both are treated as UK residents.
- Companies – non-UK resident if not UK resident for Corporation Tax purposes. Special rules apply to UK companies controlled by non-UK residents.
- Partnerships – all partners are treated as non-UK residents if any partner is non-UK resident.
- Trusts – non-UK resident if any trustee is non-UK resident, except for bare trusts or where beneficiaries have lifetime occupation rights.
- Co-ownership authorised contractual schemes (CoACS) – treated as non-UK resident if an EEA equivalent scheme
- Alternative property finance – for financial institutions, residence is determined by the person taking the finance
Who is exempt from the surcharge?
Certain buyers and transactions are not subject to the surcharge, including:
- UK resident companies, such as PAIFs or REITS
- Non-residential property, or mixed-use properties where residential relief is not claimed
- Leasehold properties with 7 years or less remaining
- Transactions entered into or substantially performed before 1 April 2021
Other reliefs, such as Crown employment relief, may also apply to reduce or remove the surcharge.
How does the stamp duty surcharge work?
The 2% surcharge applies on top of all other residential SDLT rates, including:
- Zero-rate bands
- First-time buyer relief (if applicable)
- Additional property higher rates
- Purchases by companies
- Purchases above the higher-rate threshold
Example, a non-UK resident buys a freehold residential property in England for £700,000. She does not own another property, and first-time buyer relief does not apply.
- 2% up to £125,000 = £2,500
- 4% of £125,001-£250,000 = £5,000
- 7% of £250,001-£700,000 = £31,500
- Total SDLT (including 2% surcharge) = £39,000
| Property Price | Standard SDLT Rate | 2% Non-UK Surcharge |
|---|---|---|
| Up to £125,000 | 0% | £2,500 |
| £125,001 to £250,000 | 2% | £2,500 – £5,000 |
| £250,001 to £925,000 | 5% | £5,000 – £18,500 |
| £925,001 to £1.5 million | 10% | £18,500 – £30,000 |
| Above £1.5 million | 12% | £30,000+ |
A non-UK resident could be eligible for a refund if they become a UK resident within 12 months after the transaction. However, they may need to provide evidence to HMRC to verify residence, including bank or credit card statements, work diaries or planners, mobile phone usage records, utility bills, and club memberships or similar documentation.
At Leading Property Lawyers, our expert conveyancers can here to guide non-UK residents through SDLT, the 2% surcharge, and all aspects of buying residential property in England and Northern Ireland. Call us on 0333 3055 249 or email info@leadingpropertylawyers.co.uk.
