A surcharge for Stamp Duty Land Tax (SDLT) is payable when a non-UK resident buys a major interest in a residential property for £40,000 or more. There is no set definition of a “non-UK resident” and the HMRC applies different SDLT residence tests dependent on the buyer’s circumstances.
Test 1: Buying as an Individual
To be classed as a non-UK resident when buying a property as an individual you must not be present in the UK for at least 183 days during the 12-month period prior to your purchase. For the purposes of this test, England, Wales, Scotland, and Northern Ireland are considered as the UK.
Test 2: A non-UK resident buying with someone else
If you are a non-UK resident buying a property with a UK resident, then all buyers are treated as non-UK buyers in relation to the transaction.
Test 3: A non-UK resident buying with someone whom in which they are married to/in a civil partnership
If you are a non-UK resident who is married to/in a civil partnership with a buyer who is a UK resident (or vice versa) you may not be liable to pay the SDLT surcharge for non-UK residents. HMRC guidelines advise that “as long as you are not separated and neither of you is acting as a trustee of a settlement, if one of you is UK resident in relation to the transaction then you are both treated as UK resident.”
If you are considered as a non-UK resident for SDLT purposes, a 2% surcharge is added to the relevant SDLT band.
For example, Alex purchases a freehold residential property for £500,000 on the 1st of October 2021. Alex doesn’t already own another property but is not a first-time buyer. Alex is considered a non-UK resident as Alex has only spent 100 days in England within the past 365-day period.
Alex’s SDLT liability is calculated as follows:
2% up to £125,000 = £2,500
4% of £125,001 to £250,000 = £5,000
7% of £250,001 to £500,000 = £17,500
Alex’s total SDLT liability is therefore £25,000
Alex may be eligible for a refund on the 2% surcharge if Alex is present in the UK for at least 183 days during any continuous 365-day period that falls within the 2-year period:
Beginning 364 days before the effective date of the transaction (2nd of October 2020)
Ending 364 days after the effective date of the transaction (30th of September 2022)
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