UK: Increase in Stamp Duty Land Tax (SDLT) payable on purchase of properties by non-resident individual in UK

On 8 July 2020, the Chancellor announced an immediate SDLT holiday until April 2021 on the first £500,000 paid for a residential home in England or Northern Ireland, this was further extended in the March 2021 budget announcement to 30 June 2021. A UK resident individual who is not a homeowner buying a home valued up to £500,000 would pay no SDLT, however if they already owned a residential property then the person would pay 3% SDLT surcharge applied (introduced on 1 April 2016). There was a further change coming into effect from 1 April 2021 which means that non-UK residents will pay rates that are 2% higher than those that apply to purchases made by UK residents. For example, an overseas resident individual would have to pay 5% additional SDLT (3% additional property surcharge + 2% non-resident rate) if they owned a residential property eitherin theUK or abroad. 

If you’re married or in a civil partnership 

If you’re buying the property together, then 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 in relation to the transaction therefore the 2% surcharge would not apply. 

Rates from 8 July 2020 to 30 June 2021 

You can also use this table to work out the SDLT for the purchase price

Example: You are non-resident in the UK and own a home overseas. In May 2021 you buy a house in UK for £1,025,000. The SDLT you owe will be calculated as follows: 

• 5% on the first £500,000 = £25,000 

• 10% on the second band £425,000 = £ 42,500 

• 15% on the remaining £100,000 = £ 15,000 

• Total SDLT = £82,500 

SDLT Transitional rate changes to the bands 

The government has introduced a gradual transition, to avoid a shock to the housing market with the SDLT 0% band will be lowered to £250,000 from 1 July 2021 to 30 September 2021 and from 1 October 2021 the SDLT 0% band will be back to the pre 8 July 2020 level of up to £125,000. (Residential property rates and how the bands work can be found at https://www.gov.uk/stamp-duty-land-tax/residential-property-rates). 

Please remember the 2% non-resident surcharge and/ or 3% additional property surcharge will still apply to the above rates. 

Important:- To ensure that you benefit from the lower SDLT bands you have to complete the purchase within the discounted period and if the transaction is outside this period the SDLT is chargeable at the rate applicable on the day of the transaction.