Examples of Non-Resident Company SDLT Surcharge Rules and Conditions

When a UK company is treated as non-resident for the SDLT surcharge

A company that is UK resident for corporation tax can still be treated as non-resident for the SDLT non-resident surcharge on residential property purchases in England or Northern Ireland. The key question is whether the buyer is a close company, is not excluded, and is controlled by non-resident or other relevant participators for that transaction.

• You must check more than the buyer company’s UK tax residence; the ownership and control structure can make it non-resident for surcharge purposes.
• The main steps are to decide if the buyer is a close company, whether it is excluded, and which shareholders or participators are relevant participators.
• Control is central: a non-resident interest alone is not enough unless one relevant participator, or several together, control the buyer.
• The rules may require a look-through of company shareholders to see whether they are themselves controlled by non-resident persons.
• Attribution rules can affect the outcome, including family attribution in some cases, but spouse attribution may be switched off for this test.
• Special SDLT rules can produce unexpected results, such as a quoted company being treated as close even if it would not normally be close for corporation tax purposes.

Scroll down for the full analysis.

When a UK company is treated as non-resident for the SDLT non-resident surcharge: company control examples

This page explains how the SDLT non-resident surcharge can apply to a company even if the buyer company itself is UK resident for corporation tax. The key issue is whether the company is a close company and, if so, whether it is under the control of non-resident or other “relevant” participators for the particular transaction. The official material gives examples of how that test works in practice.

What this rule is about

For the SDLT non-resident surcharge, a company can be treated as non-resident in relation to a chargeable transaction under more than one route. The examples here deal with the “second condition” in paragraph 7(3) of Schedule 9A to Finance Act 2003.

That condition matters because a company may be UK resident in the ordinary corporation tax sense, but still be treated as non-resident for surcharge purposes if the statutory control test is met.

The analysis broadly asks:

• Is the purchaser a close company for these rules?
• Is it an excluded company?
• Is it under the control of “relevant participators” in relation to the transaction?

If the company is not excluded and the control test is met, the company is treated as non-resident in relation to the transaction and the surcharge can apply.

What the official source says

The source gives four examples applying paragraph 7(3), together with the linked rules on close companies, relevant participators and the non-UK control test.

The main points shown by the examples are these:

• A UK resident company can still be treated as non-resident for surcharge purposes.
• You must first decide whether the purchaser is a close company under paragraph 8.
• You then identify which participators are “relevant participators”.
• For individual participators, residence is tested by the paragraph 5(1) day-count rule for the period used in the example.
• For company participators, you may have to look through them and test whether they themselves meet the non-UK control test.
• Associate attribution rules can matter, but they do not always apply in the usual way.

The examples also show some specific outcomes:

• A single non-resident 50% shareholder does not control a company if they only hold half and there is no attribution that gives them control.
• Two company participators can together control the purchaser, even if neither controls it alone, if both are relevant participators.
• A quoted company that would not normally be close under the general corporation tax rules can still be treated as close for these surcharge rules because paragraph 8(3) says so.
• Family attribution can make a company controlled by a non-resident participator in some cases, such as siblings.
• But paragraph 10(3) disapplies one type of spousal attribution for the non-UK control test, so a spouse’s rights may not be attributed in the usual way.
• A non-UK resident company can itself be a relevant participator and can directly cause the purchaser to meet the non-UK control test.

What this means in practice

The practical message is that you cannot stop at asking whether the buyer company is incorporated or tax resident in the UK. For surcharge purposes, the ownership chain and control position may be decisive.

In practice, the analysis may involve several layers:

• the purchaser company
• its direct shareholders or other participators
• the residence position of the individuals behind those participators
• whether any attribution rules apply

This can produce results that are not obvious.

For example, a UK company with one non-resident 50% shareholder and one UK resident 50% shareholder may not be caught, because the non-resident person alone does not control the company. But a different UK company owned by several UK companies may be caught if enough of those companies are themselves treated as controlled by non-resident persons.

The examples also show that “control” is central. A participator being non-resident is not enough by itself. The relevant participator or participators must control the purchaser company.

Another practical point is that the close company rules are being used for a specific SDLT purpose. The result may differ from what someone expects from the ordinary corporation tax close company analysis. The quoted company example makes that clear.

How to analyse it

A sensible way to work through the issue is as follows.

1. Confirm the transaction and the buyer.

   The examples concern purchases of residential property in England or Northern Ireland by companies.

2. Ask whether the buyer is UK resident for corporation tax.

   If it is, that does not end the matter. You still need to consider paragraph 7(3).

3. Ask whether the buyer is an excluded company under paragraph 11.

   In all the examples, the companies are stated not to be excluded. If a company is excluded, the second condition will not apply in the same way.

4. Decide whether the buyer is a close company under paragraph 8.

   This may depend on how many participators control it, and special rules can apply for quoted companies.

5. Identify the participators and decide which of them are relevant participators.

   For individuals, apply the residence test in paragraph 5(1). For company participators, check whether they are of a type that can be relevant participators and whether they themselves satisfy the non-UK control test.

6. Consider control carefully.

   Does one relevant participator control the buyer alone, or do two or more relevant participators together control it?

7. Check attribution rules.

   Rights of associates may sometimes be attributed, which can change the control result. But do not assume the ordinary close company attribution rules apply without modification. Paragraph 10(3) can switch off attribution in some spouse cases for this specific test.

Questions worth asking on the facts include:

• Who actually has control of the buyer company?
• Are any direct shareholders themselves companies that need to be analysed further?
• Are any shareholders connected as siblings or spouses, and does attribution apply or not apply?
• Is a quoted company still treated as close under the SDLT surcharge rules?
• Do the relevant participators together amount to control, or is there only a minority non-resident interest?

Example

Illustration based on the official examples: a UK resident company buys residential property. It is owned 40% by Company A, 40% by Company B and 20% by Company C.

Company A is not controlled by non-resident participators, so it is not a relevant participator.

Company B is a UK resident close company, but two non-resident participators together control it, so it is a relevant participator.

Company C is also a UK resident close company. One shareholder is UK resident and one is non-resident, each with 50%. If they are siblings, the sibling attribution rules can mean the non-resident shareholder is treated as controlling Company C, so Company C is also a relevant participator.

If Companies B and C together control the purchaser company, the purchaser meets the non-UK control test. If it is not an excluded company, it is treated as non-resident in relation to the transaction and the surcharge applies.

Why this can be difficult in practice

The rules are difficult because they combine several separate concepts:

• residence for surcharge purposes
• close company status
• control
• relevant participators
• attribution between associates

Each concept can change the answer.

The examples show that small factual differences can produce different outcomes:

• a 50% non-resident holding may be insufficient on its own
• two relevant participators can together create control
• sibling attribution may apply where spouse attribution does not, because paragraph 10(3) alters the usual position
• a quoted company may still count as close for these rules even if it would not normally be treated as close

Another difficulty is that the analysis may require looking through multiple companies in a chain. That can make the answer heavily fact-dependent, especially where ownership is split across individuals with different residence positions.

The official examples also proceed on stated day counts and stated ownership rights. Real cases may be harder if residence status, beneficial ownership, voting power or associate relationships are uncertain.

Key takeaways

• A UK resident company can still be treated as non-resident for the SDLT surcharge if paragraph 7(3) applies.
• The crucial issue is whether the buyer is a close company under the rules and is controlled by relevant participators.
• Control, look-through analysis and attribution rules can change the result, so the ownership structure must be tested carefully.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Examples of Non-Resident Company SDLT Surcharge Rules and Conditions

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