SDLT surcharge for non-resident transactions

15 Sep 2020

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In the 2020 Budget the Chancellor announced that a 2% Stamp Duty Land Tax (SDLT) surcharge will apply from 1 April 2021 on purchases of residential property in England and Northern Ireland by non-UK resident purchasers. The draft legislation released on 21 July 2020 clarified how this will operate.

This latest SDLT reform increases the maximum SDLT rate for non-UK residents to 17%, although the exact rate is dependent upon the circumstances, identity and intentions of the purchaser.

New rates of tax

The non-resident surcharge applies a 2% increase to all the residential rates of SDLT. The rates from April 2021 are set out below.

For example:

  • A non-resident individual purchaser of an additional dwelling will be charged a further 2% on each of the surcharged bands, culminating in a 17% charge on consideration exceeding £1.5 million. This is likely to apply to most non-resident individual purchasers who usually have at least one residential property abroad.
  • A non-resident corporate purchaser will be charged either a flat rate of 17% of the purchase price (in the case of the existing 15% higher rate charge on companies) or it will pay 17% on consideration exceeding £1.5 million.

Other property

The surcharge will not apply to commercial property rates. Thus certain transactions which presently are chargeable under the non-residential rates of SDLT despite being residential property will not be affected, eg residential property where six or more units are purchased in a single transaction and no claim for multiple dwellings relief is made.

In addition, certain rights over residential property such as some reversionary interests will be outside the new rules.

Who is affected?

The surcharge can apply to non-UK resident individuals, partnerships, companies, unit trusts, the beneficiaries of bare trusts and the trustees of other types of trust where one or more of the purchasers is non-resident. However, the SDLT definition for ‘non-resident’ is different to the existing definitions of residence for individuals and companies for other tax purposes and purchasers may have different tax status depending on the tax in question.


For SDLT purposes, an individual will be “UK resident” where they are present in the UK for at least 183 days during any continuous 365-day period in the “relevant period”. The “relevant period” begins 364 days before the effective date of the transaction and ends 365 days after that date.

Non-resident individuals who become UK resident after the date of purchase have two years from the date of purchase to amend their return to claim a refund of the surcharge paid.

It should be noted that this is very different to the residence rules for direct taxes. It is not uncommon for an individual to be considered to be UK resident for income tax purposes despite spending only 45 days a year in the UK. Such an individual would be a non-resident for SDLT.


For SDLT purposes, a company will be non-resident where the company is not UK resident for corporation tax, or where the company is resident but is a close company controlled by non-UK shareholders and their associates.

There are exemptions for properties acquired by certain types of offshore funds.


Bare trusts, life interest trusts and discretionary trusts are all treated differently by the new rules. For bare trusts and life interest trusts the non-residence test is applied to the beneficiary whereas for discretionary trusts the test is applied to the trustees.

Joint purchasers

Where a property is purchased jointly, the surcharge will apply to the entire transaction if any of the purchasers is a non-resident. Similarly, it will apply on the acquisition of a property by a partnership if any of the partners is a non-resident.

How can Saffery help?

If you are considering purchasing a property in England or Northern Ireland we can advise you on the correct rates of SDLT charge and depending on the circumstances of the purchase and your intention for the property, which SDLT reliefs may be available, for example: multiple dwellings relief, mixed-use rates, non-residential rates of SDLT and pre-completion transaction relief.

We can advise on the transitional rules which may apply, subject to conditions, where contracts exchanged before 11 March 2020 are completed or substantially performed after 1 April 2021.

We can also assist you with the compliance associated with a purchase and help you ensure that the deadline for filing the SDLT forms and paying the tax charge, which is still within 14 days of the effective date of the transaction, is met.

For advice on the new SDLT rates, please speak to your usual Saffery partner, or contact Adam Kay: [email protected]