Non-UK resident SDLT surcharge: the 2% and how to reclaim it

Where it applies

The surcharge applies to residential property in England and Northern Ireland. GOV.UK lists land in Scotland or Wales among the exclusions, so the 2% is not charged there. The tax regimes of those nations are described in LBTT in Scotland and LTT in Wales. Neither of the rates described in those guides includes a residence-based surcharge.

The residence test

For an individual, the test is physical presence, not nationality.

• You are non-UK resident for this purpose if you were not present in the UK for at least 183 days during the 12 months before the purchase.
• Days in the whole of the UK count, not only days in England or Northern Ireland.
• Presence is judged by whether you are in the UK at the end of a day.
• Nationality, citizenship, Statutory Residence Test status and visa status are not relevant (GOV.UK).
• The effective date is normally completion, or the date of substantial performance if that is earlier.

Joint buyers. If any buyer is non-UK resident, all buyers are treated as non-resident. Married couples and civil partners who are not separated are treated alike.

Companies and trusts. A company is non-UK resident if it is not UK resident for Corporation Tax purposes at the effective date, and some close companies under non-UK control are also treated as non-resident. A trust is non-resident if any trustee is non-resident, except bare trusts and certain life-interest or income trusts, where the residence of the beneficiaries is used.

The rate in practice

GOV.UK says the surcharge is paid in addition to any other applicable rates, such as the additional-property rates. The rates are 2 percentage points higher than those for UK residents.

Our calculation, £300,000, single home, no relief. Standard SDLT is £5,000. The surcharge adds 2% of £300,000 = £6,000, so the total is £11,000.

Our calculation, £300,000, additional home. The higher rates give £20,000 (see higher rates for additional properties). The surcharge adds £6,000, so the total is £26,000.

The same page lists first-time buyer treatment among the rates the surcharge sits on top of. It does not give a worked example for a non-resident first-time buyer, so ask your conveyancer to run the exact figure for your case, as the combined result depends on all your circumstances.

Exemptions

GOV.UK lists, among others:

• UK REITs and PAIFs, and their qualifying subsidiaries or group members;
• non-residential property, and mixed property in some cases;
• leases of 7 years or less at grant;
• contracts substantially performed before 1 April 2021, or exchanged before 11 March 2020 (excluding certain transactions);
• Crown employment relief, only if claimed on the return or an amendment.

Ask your conveyancer whether any of these fits your case.

Getting the surcharge back

You can claim the surcharge back if you were non-resident at completion but then meet a presence test.

• All purchasers must be individuals, not companies.
• You must be present in the UK for at least 183 days in any continuous 365-day period that falls inside a window running from 364 days before the effective date to 365 days after it.
• With several buyers, each may use a different 365-day period, but all must meet the rule.
• The claim is made by amending the SDLT return, within 2 years after the effective date.

At the time of filing the return, you assume you are non-resident if you have not yet spent 183 days in the UK. Keep records of your days in the UK from the start (flights, tickets, a diary), because you will need to be able to support the claim.

The deadline

The return is due within 14 days of the effective date, and payment follows once the return has been sent (GOV.UK). Your conveyancer normally files it.

Which professional to consult

A conveyancer or solicitor applies the residence test to your dates, files the return and any amendment, and pays the tax. For wider tax questions about your residence, a tax adviser may be needed. See the conveyancer. To model the main-rate part of the bill, use the stamp duty calculator.