HMRC SDLT: SDLTM09880 – SDLT – increased rates for non-resident transactions: Non-resident in relation to a chargeable transaction: Individuals, basic rule – para 4 Sch 9A FA03
SDLT Increased Rates for Non-Resident Transactions
This section of the HMRC internal manual discusses the increased Stamp Duty Land Tax (SDLT) rates applicable to non-resident transactions. It outlines the basic rule for determining non-residency in relation to a chargeable transaction, as per paragraph 4 of Schedule 9A of the Finance Act 2003.
- Focuses on non-resident individuals involved in chargeable transactions.
- Explains the criteria for determining non-residency status.
- Provides guidance on applying increased SDLT rates.
- Part of the HMRC manual for internal use.
SDLT – Increased Rates for Non-Resident Transactions
Introduction to Non-Resident Status
To understand the rules around the Stamp Duty Land Tax (SDLT) surcharge for non-resident individuals, it is important to note that the criteria used to determine if someone is considered a non-UK resident is different from the Statutory Residence Test (SRT) which applies to other taxes.
Understanding the SRT
The SRT involves various interconnected tests. These tests assess:
– The individual’s connections to the UK
– The amount of time spent in the UK during a tax year
Since SDLT is a form of transaction tax, the concept of a ‘tax year’ does not apply here.
Key Definition of UK Residency for SDLT
For the current SDLT surcharge, an individual is considered a UK resident in relation to a chargeable transaction if:
– They have spent at least 183 days in the UK during any continuous 365-day period that falls within what is referred to as the “relevant period” (see paragraph 4(1)).
What is the Relevant Period?
The relevant period for determining residency consists of:
– A start date that is 364 days before the effective date of the transaction (paragraph 4(2)(a))
– An end date that is 365 days after the effective date of the transaction (paragraph 4(2)(b))
Timelines for SDLT Returns
It is also critical to submit the SDLT return within 14 days of the transaction’s effective date. If an individual has spent less than 183 days in the UK at the time of submission, the SDLT return should assume that the individual is non-UK resident.
If this is the case, the purchase will be deemed a “non-resident transaction” and the surcharge will be applied, provided all conditions in paragraph 2(1) are met. For further details about these conditions, see SDLTM09860.
If, after the transaction has occurred, the individual meets the residency condition outlined in paragraph 4(1), they can amend their SDLT return. This allows them to inform HMRC that the surcharge is not applicable and claim a refund for the surcharge paid. More details on this process can be found in SDLTM09960.
Days Spent in the UK
Days spent in the UK are taken into account for this residency test, and it is important to note:
– Days spent in the entirety of the UK are relevant, not just those in England or Northern Ireland.
An individual is said to be present in the UK on a given day if they are in the UK at the end of that day (paragraph 4(4)).
When the Rule Applies
The basic rule for determining residency applies only to chargeable transactions where all purchasers are individuals. Different regulations apply in different scenarios (see paragraph 4(3)), and more detail can be found in SDLTM09890.
Specific rules also govern situations involving spouses or civil partners as joint purchasers. Further guidance can be accessed in SDLTM09885.
Examples of Sole Purchasers
Here are some examples to illustrate how this works for sole purchasers:
Example 1: Tunde
– Tunde lives in Canada.
– He buys a freehold residential property in England on 1 June 2025 for £800,000.
– Between 2 June 2024 and 1 June 2025, he spent 200 days in the UK.
In this case, Tunde is deemed a UK resident for the transaction.
Example 2: Parvati
– Parvati lives in South Africa.
– She buys a 120-year leasehold interest in a residential property in England on 1 June 2025 for £300,000.
– Between 2 June 2025 and 1 June 2026, she spent 200 days in the UK.
While Parvati meets the residency condition after submitting her SDLT return by the 15 June 2025 deadline, she has spent less than 183 days in the UK at that time. Therefore, the transaction is treated as non-resident, and the SDLT return assumes the surcharge is due. When she meets the residency requirement later, she can amend her return for a refund of the 2% surcharge.
Example 3: Mohammed
– Mohammed lives in France.
– He buys a 99-year leasehold interest in a residential property in England on 1 June 2025 for £200,000.
– Between 1 February and 1 June 2025, he spent 100 days in the UK.
– From 2 June 2025 to 31 January 2026, he spent 85 additional days in the UK.
Just like Parvati, although he will eventually meet the residency requirement, Mohammed spent less than 183 days in the UK when he submitted his SDLT return. Thus, the transaction is processed as a non-resident purchase, and he can later amend the return for a potential refund of the surcharge.
Joint Purchasers
For joint purchasers, different rules apply concerning non-resident status, and more information can be found in SDLTM09875.
When there are two or more purchasers, each individual’s continuous 365-day period is assessed separately. The transaction will only cease being classified as a non-resident transaction when every purchaser has met the requirement of being in the UK for at least 183 days out of 365 within the relevant period.
Joint Purchaser Example 1: Elijah, Klaus, and Hayley
– Elijah, Klaus, and Hayley live in the USA.
– They buy a freehold residential property in Northern Ireland on 1 June 2025 for £950,000.
– Elijah spends 183 days in the UK between 2 June 2024 and 1 June 2025.
– Klaus spends 183 days in the UK between 2 June 2025 and 1 June 2026.
– Hayley spends 275 days in the UK between 1 August 2024 and 31 July 2025.
Despite all three becoming UK residents during their respective periods, the SDLT return must be submitted by 15 June 2025. Because Klaus has not yet spent 183 days in the UK at the time of submission, the SDLT return will assume a non-resident status for the transaction. When Klaus meets the residency requirement, the return can be amended for a refund of the surcharge.
Joint Purchaser Example 2: Finn, Henry, and Caleb
– Finn, Henry, and Caleb also live in the USA.
– They jointly purchase a property in Northern Ireland on 1 June 2025 for £950,000.
– Finn spends 183 days in the UK from 2 June 2024 to 1 June 2025.
– Henry spends 183 days from 2 June 2025 to 1 June 2026.
– Caleb spends 100 days in the UK during the relevant time but does not reach the 183 days requirement as he has not stayed continuously.
Due to not all three purchasers being classified as UK residents at the date of submission (15 June 2025), the SDLT return will reflect the assumption of non-resident status and include the surcharge. Despite Henry potentially becoming a resident later, Caleb’s failure