SDLT Non-Resident Transactions: Non-UK Control Test and Rights Attribution Explained

SDLT non-resident surcharge: attributing company rights and powers under the non-UK control test

When deciding whether a company is under non-UK control for the SDLT non-resident surcharge, the usual close company attribution rules may apply, but with important limits. For surcharge purposes, rights are not attributed between people who are only business partners, certain rights of a UK-resident spouse or civil partner living with the other spouse or civil partner cannot be attributed in the specified direction, and rights are ignored if the holder’s interest is genuinely de minimis under a strict all-measures-below-5% test.

• The control test uses close company principles from CTA 2010, but Schedule 9A FA 2003 narrows when another person’s rights and powers can be treated as yours.
• Rights and powers are not attributed between people just because they are business partners.
• If spouses or civil partners are living together, a UK-resident spouse or civil partner’s rights cannot be attributed to the other spouse or civil partner for this rule.
• A de minimis interest blocks attribution only if share capital, voting rights, income rights and asset rights on winding up or similar distributions are all below 5%.
• Whether spouses or civil partners are living together is judged under section 1011 ITA 2007, which generally treats them as living together unless a formal or likely permanent separation applies.
• In practice, you should first identify direct rights, then test any general attribution, then check whether the SDLT-specific limits switch that attribution off before deciding if the company is under non-UK control.

Scroll down for the full analysis.

SDLT non-resident surcharge for companies: when rights and powers are attributed under the non-UK control test

This page explains a technical part of the SDLT non-resident surcharge rules for companies. The issue is how you work out who controls a company when applying the non-UK control test, and in particular when one person’s rights and powers can be treated as belonging to someone else. That matters because a company can be treated as non-UK resident for surcharge purposes if it is under non-UK control.

What this rule is about

For the SDLT non-resident surcharge, a company may be treated as non-UK resident if certain conditions are met. One of those conditions looks at whether the company is under non-UK control.

To decide who controls a company, the legislation borrows from the close company rules in Chapter 2 of Part 10 of CTA 2010. Under those rules, a person’s own rights and powers are counted, but in some cases the rights and powers of other people are also attributed to them. That can increase the level of control treated as belonging to that person.

Paragraph 10 of Schedule 9A to FA 2003 modifies those attribution rules for the surcharge. The purpose is to limit attribution in some situations, so that control is not expanded too widely when deciding whether the company is under non-UK control.

What the official source says

The source says that section 451 CTA 2010 can attribute the rights and powers of certain other persons to a participator when deciding who controls a company. But for the SDLT surcharge, paragraph 10 places three important limits on that attribution.

First, rights and powers cannot be attributed between people who are only business partners. Being in partnership by itself is not enough to aggregate their rights for this purpose.

Second, there is a special rule for spouses and civil partners who are living together. If A and B are spouses or civil partners, they are living together, and A is UK resident in relation to the transaction, A’s rights and powers cannot be attributed to B. The direction of the rule matters. The source is specifically preventing attribution from the UK-resident spouse or civil partner to the other spouse or civil partner.

Third, there is no attribution where the person whose rights and powers are in question has only a de minimis interest in the company.

For these purposes, an interest is de minimis only if all of the following are below 5%:

• their share capital or issued share capital interest, including what they are entitled to acquire;
• their voting rights, including what they are entitled to acquire;
• their entitlement to income on a notional full distribution of the company’s income among participators, ignoring rights as a loan creditor; and
• their entitlement to assets on a winding up or other distribution circumstances.

The source also says that whether spouses or civil partners are living together is determined using section 1011 ITA 2007. Under that rule, they are treated as living together unless they are separated by court order, by deed of separation, or in fact separated in circumstances likely to be permanent.

What this means in practice

In practice, this is a control-calculation rule. It does not itself impose the surcharge. Instead, it affects the earlier question: who is treated as controlling the company?

If rights are attributed, a person may be treated as having more influence or ownership than they hold directly. That may push the company into non-UK control. But paragraph 10 stops that happening in some cases.

The practical effect of the three limits is as follows.

If two people are merely business partners, you do not attribute rights between them just because of the partnership relationship. So a non-UK resident partner is not automatically treated as holding the UK-resident partner’s company rights for this test.

If spouses or civil partners are living together, and one of them is UK resident, that UK-resident person’s rights cannot be attributed to the other spouse or civil partner. This can matter where the other spouse or civil partner is non-UK resident. The rule can prevent the non-UK resident spouse or civil partner from being treated as controlling the company by aggregation of the UK-resident spouse’s rights.

If a person’s interest is genuinely very small, their rights are ignored for attribution purposes. But the threshold is strict. The interest is de minimis only if it is below 5% on every one of the listed measures. If any one measure is 5% or more, the de minimis protection does not apply.

How to analyse it

A sensible way to approach this issue is:

1. Identify the participators and their direct rights and powers in the company.
2. Consider whether the general close company attribution rules in section 451 CTA 2010 would attribute rights from one person to another.
3. Then apply paragraph 10 and ask whether that attribution is switched off for surcharge purposes.
4. Check specifically whether the relationship is only a business partnership.
5. If spouses or civil partners are involved, ask:
   • are they married or in a civil partnership?
   • are they living together under section 1011 ITA 2007?
   • is the person whose rights are being attributed UK resident in relation to the transaction?
   • what is the direction of the proposed attribution?
6. For any small shareholding or minority interest, test whether it is de minimis by checking all four 5% conditions, not just share capital.
7. Only after that should you decide whether the company is under non-UK control for surcharge purposes.

The main point is that attribution is not automatic. Even if attribution would exist under the general corporation tax rules, it may be restricted here.

Example

This is an illustration only.

A non-UK resident individual and their UK-resident spouse each hold interests in a company buying residential property. When testing control, one question is whether the UK-resident spouse’s rights can be attributed to the non-UK resident spouse.

If they are living together, paragraph 10(3) says the UK-resident spouse’s rights and powers may not be attributed to the other spouse. So the non-UK resident spouse cannot be treated as having those additional rights through that route.

By contrast, if someone holds only a very small interest, you must test all four de minimis conditions. Suppose a person has less than 5% of the share capital and less than 5% of the votes, but rights on a winding up that would give them 6% of distributable assets. Their interest is not de minimis, because one of the required limbs is not below 5%.

Why this can be difficult in practice

The first difficulty is that this rule sits on top of the general close company control rules. You need to understand both the underlying attribution rule in CTA 2010 and the SDLT-specific restrictions in Schedule 9A.

The second difficulty is direction. The spouse and civil partner rule is not a broad statement that no attribution can occur between spouses. The source is framed in a particular direction: where A is UK resident, A’s rights cannot be attributed to B. That direction needs to be read carefully in the facts being tested.

The third difficulty is the de minimis test. It is easy to focus only on shares or votes, but the legislation also looks at income rights and rights to assets on winding up or other distributions. Different classes of shares or bespoke constitutional rights can make this more complicated than it first appears.

The fourth difficulty is determining whether spouses or civil partners are living together. The legislation treats them as living together unless one of the specific separation conditions applies. Informal arrangements may not be enough unless the factual separation is likely to be permanent.

Key takeaways

• For the SDLT non-resident surcharge, company control is tested using close company principles, but Schedule 9A limits when rights can be attributed.
• Attribution is switched off where people are only business partners, and in certain cases involving a UK-resident spouse or civil partner who is living together with the other spouse or civil partner.
• A small holding is ignored for attribution only if it is below 5% on every relevant measure, including shares, votes, income rights and asset rights.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: SDLT Non-Resident Transactions: Non-UK Control Test and Rights Attribution Explained

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