New rates of Stamp Duty for overseas property buyers from April 2021

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What is the new 2% Stamp Duty that will affect foreign buyers?

Chancellor Rishi Sunak announced in the recent budget that the government will be introducing a new 2% Stamp Duty Land Tax (SDLT) surcharge for overseas investors not resident in the UK who buy residential property in England and Northern Ireland. This will take effect from April 1st 2021 and applies to the purchase of both freehold and leasehold properties.

The Stamp Duty rate for non-UK residents will therefore be 2% higher than the rate that applies to UK residents. This is the first time that the rate of Stamp Duty payable will be affected by a buyer’s place of residence.

Currently, non-UK residents pay the same rate of Stamp Duty as UK residents. The surcharge has been introduced to raise money to help deal with the problem of rough sleeping and homelessness in the UK.

Find more of our articles about Stamp Duty here

Are you a non-UK resident?

An individual will be treated as a non-UK resident if they spend fewer than 183 days in the UK in the 12 months before the date of purchase.

If they spend at least 183 days in the UK in the 12 months after the purchase they may be able to claim a refund of the surcharge.

For more detailed information about the new Stamp Duty rules, go to the Gov.UK website here

Transitional rules

The 2% surcharge will apply to property purchases from April 1st 2021 and there may be transitional rules for transactions where contracts have been exchanged before March 11th 2020 but do not complete until after April 1st 2021 and for contracts that are exchanged before March 31st 2021 but do not complete until after April 1st 2021.

3% Stamp Duty surcharge for anyone buying an additional property in the UK

Overseas buyers should be aware that there is also a 3% Stamp Duty Land Tax (SDLT) surcharge for anyone buying an additional property in the UK, whether a second home, buy-to-let property or holiday home. This surcharge applies to UK and non-UK residents and for non-UK residents will apply in addition to the 2% surcharge.

For more information on the Stamp Duty surcharge for those who already own a main residence read our previous blog about this here

Can a Non-Resident set up a UK company to avoid the new 2% surcharge?

The Government has said they intend to ‘look through’ the ownership structure. This means that if a UK company is owned by non-residents, the purchase will be treated in the same way as if the non-resident individual had purchased the property directly, and therefore, the new 2% surcharge will still apply to those purchases from 1 April 2021.

Stamp Duty calculator

To find out exactly how much Stamp Duty you can currently expect to pay on a prospective property purchase, go to our stamp duty tax calculator which will calculate the amount for you.

Contact us for more information

If any of our clients are unsure how the new rules affect them, we are happy to discuss them in more detail. For more information email us with your request.

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About the Author

Vidhur studied Management Sciences at Manchester University, focusing on accountancy, before going on to qualify as a chartered accountant. He began his career working in investment banking but after several years decided to join Benham and Reeves in 2003. Since then he has expanded the finance department, introducing a broader range of services to encompass all financial aspects of property investment, from collecting rent through to completing tax returns (or ATED returns for overseas companies). Read more about Vidhur Mehra here - Read full profile

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