Expats and other non-resident property investors can be forgiven for trying to work out the stamp duty they must pay on buying homes in the UK.
Table of contents
- Who is ‘non-resident’ for stamp duty?
- When does the Non-Resident Stamp Duty Charge apply?
- How much is the Non-Resident Stamp Duty Surcharge?
- The Expat Partner Stamp Duty Trap
- Non-Resident Stamp Duty Surcharge exemptions and refunds
- Stamp Duty Land Tax Non-UK Resident Surcharge FAQ
- Related Articles, Guides and Insights
- Questions or Comments?
The buoyant UK housing market has boomed in recent times, with prices fuelled by a stamp duty holiday and struggling pound giving foreign buyers more bang for their bucks.
Although the government wants to encourage a property bonanza, the deal for expats is nowhere near as good as that for onshore buyers.
Add to that ever-changing rules and it’s complicated for expats to work out their stamp duty bills.
This article explains how the Non-Resident Stamp Duty Surcharge impacts expats and other buyers based abroad.
Who is ‘non-resident’ for stamp duty?
The first step is working out if you are an expat considered UK non-resident.
The residence test for stamp duty is different from the qualifying rules laid out in the Statutory Residence Test followed by HM Revenue & Customs to determine tax residence.
That means you can be non-resident for stamp duty but resident for other taxes.
The stamp duty test ignores nationality, visas and domicile and simply asks how much time you spent in the UK prior to the property purchase date.
You pay the Non-Resident Stamp Duty Surcharge if:
- You haven’t lived in the UK for at least 183 days in the year up to the purchase date.
- Those days can be spent anywhere in the UK (England, Wales, Scotland or Northern Ireland) regardless of where the property is located
- Each day would count as a ‘resident day’ if you were in the UK at midnight on that day
For the test, someone living outside the UK for six months of the year is non-resident.
Read our guide to the Non Resident Landlord Scheme.
When does the Non-Resident Stamp Duty Charge apply?
The Non-Resident Stamp Duty Charge applies to all home purchases in England and Northern Ireland.
The rules are different in Scotland and Wales.
Stamp Duty is a buying cost due within 30 days of the seller handing the keys over.
During the Stamp Duty holiday, you must understand when and how the rules change so you can work out the correct tax to pay.
How much is the Non-Resident Stamp Duty Surcharge?
The stamp duty rate for expats and other non-residents adds 2% to the rate paid by onshore home buyers,
A key point is there is no zero rate – where UK buyers pay no stamp duty, non-residents pay 2%.
For example, if someone in England buys a home for £375,000 in May 2021, they pay no stamp duty. For an expat buying the same house on the same day at the same price, the stamp duty charge would be £7,500.
However the rates vary as the Stamp Duty holiday tapers off:
Stamp duty rates until June 30, 2021
| Property Value | UK rate | Non-resident rate |
| Up to £500,000 | Zero | 2% |
| £500,001 to £925,000 | 5% | 7% |
| £925,001 to £1.5 million | 10% | 12% |
| Over £1.5 million | 12% | 14% |
Stamp duty rates between July 1, 2021 until September 30, 2021
| Property Value | UK rate | Non-resident rate |
| Up to £250,000 | Zero | 2% |
| £250,001 to £925,000 | 5% | 7% |
| £925,001 to £1.5 million | 10% | 12% |
| Over £1.5 million | 12% | 14% |
Stamp duty rates from October 1, 2021
| Property Value | UK rate | Non-resident rate |
| Up to £125,000 | Zero | 2% |
| £125,001 to £250,000 | 2% | 4% |
| £250,001 to £925,000 | 5% | 7% |
| £925,001 to £1.5 million | 10% | 12% |
| Over £1.5 million | 12% | 14% |
The extra rate is payable on any property purchase, if:
- The cost is over £40,000 (including a share in a leasehold over this value).
- Any individual buyer is a non-resident in a joint purchase.
- The property is not leasehold with less than seven years remaining.
The Expat Partner Stamp Duty Trap
This pitfall is one to watch out for if you are a UK resident with a non-resident partner and you are not married to them.
Under Non-UK Resident Stamp Duty Surcharge rules, if your non-resident partner buys a major interest in a property in England or Northern Ireland, anyone they are buying with pays the surcharge as well.
This could hit expat couples where one is temporarily abroad.
Married couples and civil partnerships escape the rule and pay stamp duty at standard UK rates.
Non-Resident Stamp Duty Surcharge exemptions and refunds
If you buy a UK property and pay the non-resident levy, you can also claim this back provided you meet the 183-day residence test within one year of the transaction.
- Non-residential properties purchased by a non-resident buyer.
- Mixed transactions, purchasing some commercial property and some residential. However, if you claim Multiple Dwellings Relief, then the surcharge is levied.
- If the contract was signed and executed before April 1, 2021, or you exchanged contracts before March 11, 2020.
- Purchases made through Property Authorised Investment Funds (PAIF), corporate bodies that are over a 50% subsidiary of a PAIF, UK Real Estate Investment Trusts (REIT) or companies that are group members of a UK REIT.
Stamp Duty Land Tax Non-UK Resident Surcharge FAQ
The Stamp Duty surcharge is based on how long you have been in the UK in the last 12 months. So even if you are a citizen, have a British passport, or a residence visa, you can be liable.
Criteria look at whether you were in the UK for at least 183 days (six months) of the last year leading up to the purchase date. If not, you are liable for the surcharge.
It might be, although it’s always wise to seek professional financial advice before making any decisions. Trusts held by trustees who are considered non-residents for Stamp Duty are treated the same way and need to pay the surcharge.
However, bare trusts and those allowing the beneficiary to remain in the home for life are not included.
Be aware that having this sort of trust isn’t a sure-fire way to avoid the Stamp Duty surcharge since the residence test may still be applied to trust beneficiaries.
The surcharge came into effect from April 1, 2021, so it applies to any residential property purchases made in England or Northern Ireland since that date.
If you exchanged contracts and completed a purchase beforehand, you won’t need to pay the surcharge.
You can also claim an exemption if contracts were exchanged before March 11, 2020, but the completion hasn’t yet happened.
Stamp Duty thresholds don’t change between residents and non-residents.
From October 1, properties costing up to £125,000 are exempt from Stamp Duty. However, non-residents pay a 2% surcharge on top of the standard rate.
If two people buy a home together, and one is a non-resident, then the entire transaction is treated as a non-resident purchase, and the additional 2|% charge is applied.
Related Articles, Guides and Insights
Below is a list of some related articles, guides and insights that you may find of interest.
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