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Who is affected by the Stamp Duty surcharge for non-UK residents?

From 1st April 2021, a Stamp Duty Land Tax (SDLT) surcharge will apply for non-UK residents purchasing a residential property in England and Northern Ireland.

The surcharge will add a further 2% of tax to the rate of SDLT payable:

Property valueSDLT rateSDLT rate with non-UK resident surchargeSDLT rate with non-UK resident surcharge, plus 3% surcharge for second homes

Up to £125,000

0

2%

5%

The next £125,000 (the portion from £125,001 to £250,000)

2%

4%

7%

The next £675,000 (the portion from £250,001 to £925,000)

5%

7%

10%

The next £575,000 (the portion from £924,001 to £1.5 million)

10%

12%

15%

The remaining amount (the portion above £1.5 million)

12%

14%

17%

How does the surcharge work?

The surcharge applies to:

  • Residential property purchases, including leasehold and freehold properties. It also applies if the property is under construction.
  • ‘Non-resident transactions’: the surcharge will apply even if you plan to live in the property you are purchasing. It also applies if you already own a residential property.
  • Major interest purchases for £40,000 if one or more purchasers do not reside in the UK

The surcharge does not apply to:

  • Purchases under £40,000 (unless the rent is over £1,000)
  • Leases with seven years (or less)

Who is affected by the surcharge?

Nationality, citizenship or residence status (UK Statutory Residence Test) are not used to establish whether a buyer is a non-UK resident in relation to a residential property transaction.

Individual buyers are classed as a UK resident if they have been living in the UK for at least 183 days during the 12 months before the property purchase takes place. If the 183-day test is not met, the individual is classed as a non-UK resident and will be required to pay the surcharge.

The rules apply to each person who is purchasing the property. If any individual purchasing the property is non-UK resident, then all buyers are treated as non-UK residents for the purpose of the purchase transaction.

However, where individuals purchasing a property are married, if one partner is a UK resident, then both are regarded as a UK resident for the purposes of the purchase transaction (so long as they are not separated, and neither is acting as a trustee of a settlement).

If you become a UK resident in the year following completion you may be able to reclaim the additional rate of tax paid upon completion of your purchase.

If you’re buying or selling, you can get a free, instant quote using our online calculator. Simply complete yours and the property’s details to access your quote.

Our Conveyancing team is here to help. For more information and advice, please call 0113 264 4414 or email conveyancing@emsleys.co.uk.

Adam Dawson

Written by

Adam Dawson

Associate Director

Adam is an Associate Director. He qualified as a Solicitor in 2012 and specialises in all aspects of residential conveyancing including freehold and leasehold sales and purchases, auction purchases, re-mortgages, transfers of equity, shared ownership and grants of new leases. Adam also supports the development of our...

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