2% SDLT surcharge for non-residents

The following Tax practice note provides comprehensive and up to date legal information covering:

  • 2% SDLT surcharge for non-residents
  • Background
  • When does the 2% surcharge apply?
  • What is the rate of SDLT when the 2% surcharge applies?
  • Conditions: what is the residence test?
  • Residence test: individuals
  • Residence test for individuals: basic rule
  • Residence test for individuals: special cases
  • Residence test: companies
  • Specific purchasers and transactions
  • More...

2% SDLT surcharge for non-residents

From 1 April 2021, non-UK residents that buy residential property in England and Northern Ireland pay a 2% surcharge in addition to the stamp duty land tax (SDLT) rates for residential property. This Practice Note examines when the 2% surcharge applies. The SDLT rules for residential property transactions are complicated. There are various different SDLT rates that can apply to the acquisition of a residential property and, with effect from 1 April 2021, the 2% surcharge adds another set of rates to this. This Practice Note has been drafted by reference to draft legislation and is subject to change as the legislation is finalised.

SDLT does not apply in Scotland or Northern Ireland. For more on Scottish land and buildings transaction tax (LBTT) and Welsh land transaction tax (LTT), see the LBTT subtopic and the LTT subtopic.

Background

The government announced a surcharge for non-residents buying residential property in England and Northern Ireland at Budget 2018. The surcharge was confirmed at Spring Budget 2020 and the government consulted on the surcharge until 6 May 2019. Following the consultation, the government published draft legislation that was included in Finance Act 2021. The 2% surcharge for non-residents is intended to reduce purchases of dwellings by non-residents, which in turn is hoped will reduce house price inflation.

When does the 2% surcharge apply?

The 2% surcharge applies to

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