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SDLTM09870A | SDLT - Increased rates for non-resident transactions: Application of the temporary reduced rates of SDLT to non-resident transactions

From HM Revenue & Customs · Stamp Duty Land Tax Manual

Reduced rates of Stamp Duty Land Tax (SDLT) will apply for purchases of residential properties with an effective date of transaction falling in the periods 8 July 2020 until 30 June 2021 and from 1 July 2021 to 30 September 2021 inclusive.

From 1 April 2021 to 30 September 2021, where a chargeable transaction is identified as a non-resident transaction, a 2% surcharge will be added to the temporary reduced rates.

On 1 October 2021 the temporary rates of SDLT will revert back to the standard rates that were in place prior to 8 July 2020.

More details can be found here.

Example 1

Genevieve purchases a freehold residential property in England on 1 May 2021 for £450,000. Genevieve does not already own another property, so the higher rates on additional dwellings do not apply to her.

Genevieve is classed as non-UK resident under the test set out at paragraph 4 of Schedule 9A to FA03, and the surcharge applies. As the SDLT temporary reduced rates are in force, her SDLT liability is calculated as follows:

  • 2% up to £450,000 = £9,000 (0% temporary reduced rate + 2% non-resident surcharge)

Genevieve’s total SDLT liability is therefore £9,000.

Example 2

Cortez purchases a new 99 year lease on a flat in Northern Ireland on 31 August 2021 for a premium of £250,000 and rent of £1,200 per annum. Cortez already owns another property and is not replacing his main residence, so the higher rates of additional dwellings will apply.

Cortez is classed as non-UK resident according to the test set out at paragraph 4 of Schedule 9A to FA03, and the surcharge applies. As the SDLT temporary reduced rates are in force, his SDLT liability is calculated as follows:

Premium

  • 5% of £250,000 = £12,500 (3% higher rates for additional dwellings +2% non-resident surcharge)

Rent

  • 2% of £33,147 = £662 (0% temporary reduced rate + 2% non-resident surcharge)

Cortez’s total SDLT liability is therefore £13,162.