SDLTM09860 | SDLT - increased rates for non-resident transactions: Non-resident Transactions - para 2 Sch 9A FA03

(All legislative references are to Sch 9A FA03 unless otherwise stated.)

The surcharge applies to any purchase of (paragraph 2(1)):

• a major interest in one or more dwellings; or

• a major interest in one or more dwellings and other property, where:

  • one or more purchasers is non-resident in relation to the transaction;

  • at the beginning of the effective date of the transaction, the major interest being acquired is not a lease with 7 years or less to run; and

  • the de minimis threshold is exceeded.

A major interest in a dwelling means freehold or leasehold ownership of that dwelling, and includes an undivided share in a major interest in a dwelling (paragraph 2(2)). See SDLTM09865 for more details.

The de minimis threshold is exceeded if one of the following applies (paragraph 2(3)):

• where the chargeable consideration for the transaction does not consist of or include rent, the chargeable consideration is £40,000 or more; or

• where the chargeable consideration for the transaction consists of or includes rent:

  • the chargeable consideration other than rent is £40,000 or more; or

  • the annual rent is £1,000 or more.

“Annual rent” in relation to a transaction, means the average annual rent over the term of the lease to which the transaction relates or, the average annual rent over the period for which the highest ascertainable rent is payable in cases where (paragraph 2(4)):

• different amounts of rents are payable for different parts of the term; and

• those amounts (or any of them) are ascertainable at the effective date of the transaction.

A purchaser is non-resident in relation to a transaction if they meet any of the conditions set out in paragraphs 3 to 5 (individuals) or paragraph 7 (companies). There are also special rules for determining residence in relation to particular purchases and transactions in Part 5. These conditions are covered in detail at SDLTM09880 onwards.

Example - lease transactions (length of lease)

A leasehold interest originally granted for 50 years but at the effective date of the transaction has four years left before it expires will not be subject to the surcharge.

A leasehold interest originally granted for 50 years but at the effective date of the transaction has eight years left before it expires will be subject to the surcharge (if the other conditions in paragraph 2(1) are met).

What is not a “non-resident transaction”

The following transactions will not comprise non-resident transactions and the surcharge will not apply.

Purchases of:

• non-residential properties;

• mixed (residential and non-residential) properties, except for a transaction which incorporates more than one dwelling where a “Multiple Dwellings Relief” claim is made in respect of the residential element of the transaction, or a transaction where the subject matter includes a higher threshold interest as per Schedule 4A (SDLTM09500 onwards).

See SDLTM29900 for more details on how the surcharge applies to transactions where Multiple Dwellings Relief is claimed.