SDLT Non-Resident Surcharge: UK Residency Rules for Special Cases and Conditions

SDLT Non-Resident Surcharge: Special Residence Rules for Individuals

In some SDLT residential property transactions involving companies, partnerships or certain trusts, individuals are tested under a stricter UK residence rule for the 2% non-resident surcharge. Instead of using the usual rule that can take account of days spent in the UK after completion, the individual must already have been in the UK for at least 183 days in the 365-day period ending on the effective date of the transaction.

• This special rule applies where the transaction involves a company, a unit trust trustee, certain partnership cases, or certain settlement trustees.
• A day counts if the individual is in the UK at the end of that day, and days spent anywhere in the UK are included.
• If the individual has not reached 183 UK days by the effective date, they are treated as non-UK resident for surcharge purposes, even if they later spend more time in the UK.
• HMRC says no refund of the surcharge is available in these cases based on later UK residence after completion.
• Trust cases need extra care, because the rule only applies to certain settlements and depends on whether any beneficiary has rights to occupy the property for life or receive income from it.
• The spouse or civil partner rule may still affect the result, so the wider Schedule 9A rules should also be checked.

Scroll down for the full analysis.

SDLT non-resident surcharge: special residence rules for individuals in company, partnership and trust cases

This page explains a special SDLT residence test for individuals when a residential property purchase involves certain mixed or indirect structures, such as companies, partnerships and some trusts. The rule matters because it can make an individual non-UK resident for the purposes of the 2% non-resident surcharge even if that individual would have met the ordinary individual test.

What this rule is about

For the SDLT non-resident surcharge, an individual is usually tested by looking at days spent in the UK over a period that can extend after the effective date of the transaction. In some cases, however, that ordinary rule is replaced by a stricter rule.

This stricter rule applies where the transaction includes certain non-individual purchasers or certain trust or partnership situations. In those cases, the individual must already have spent at least 183 days in the UK during the 365-day period ending on the effective date of the transaction itself. Later days do not help.

The practical effect is important. If this special rule applies and the individual has not reached 183 UK days by the effective date, the surcharge position is fixed at that point. There is no later refund based on additional UK presence after completion.

What the official source says

The source is paragraph 5 of Schedule 9A to Finance Act 2003, as summarised in HMRC manual SDLTM09890.

Under this rule, an individual is UK resident in relation to the transaction only if both of the following are true:

• the individual is present in the UK on at least 183 days in the period beginning 364 days before the effective date and ending on the effective date itself, and
• one of Conditions A, B or C applies to the transaction.

The three conditions are:

• Condition A: the purchaser is, or includes, a company or a person acting as trustee of a unit trust scheme.
• Condition B: the purchaser is, or includes, an individual treated as entering into the transaction under the partnership rules in paragraph 2 of Schedule 15 to Finance Act 2003.
• Condition C: the purchaser is, or includes, an individual acting as trustee of a settlement, and under the settlement no beneficiary is entitled either to occupy the dwelling for life or to income from it.

The manual also confirms that, as with the ordinary rule for individuals:

• a person is present in the UK on a day if they are in the UK at the end of that day,
• days anywhere in the UK count, not just days in England or Northern Ireland, and
• the special spouse and civil partner rule in paragraph 12 still applies.

Because the relevant period ends on the effective date, HMRC says refunds of the surcharge are not possible where paragraph 5 applies.

What this means in practice

This rule is aimed at transactions where an individual’s residence status matters to the surcharge analysis, but the purchase is not a straightforward purchase by individuals alone.

In practice, it commonly matters in three types of case.

• Company structures: for example, where the purchaser is a company and the legislation requires you to test whether an individual participator who controls the company is UK resident.
• Partnership purchases: because SDLT can treat a land transaction entered into for partnership purposes as entered into by or on behalf of the partners rather than the partnership.
• Certain settlement trustees: where an individual trustee buys and no beneficiary has a life occupation right or a right to income from the property.

If one of those situations exists, you do not use the more flexible individual rule that can look beyond completion. Instead, you ask a narrower question: had the individual already accumulated 183 days in the UK by the effective date?

If the answer is no, that individual is non-UK resident in relation to the transaction for surcharge purposes, even if they later spend enough days in the UK to satisfy the ordinary test.

That can affect the whole transaction. The manual’s partnership example shows that where one partner is non-UK resident under this special rule, the condition for a non-resident transaction can be met, assuming the other statutory conditions are also satisfied.

How to analyse it

A sensible way to approach the issue is as follows.

1. Identify whether the transaction is one where an individual’s residence status is relevant to the surcharge analysis.
2. Check whether paragraph 5 is engaged by Condition A, B or C.
3. If it is, ignore any idea of fixing the position by later UK presence after completion.
4. Count the individual’s UK days in the 365-day period ending on the effective date.
5. Apply the statutory day-counting rule: a day counts if the individual is in the UK at the end of that day.
6. Remember that days anywhere in the UK count.
7. Consider whether the spouse or civil partner rule in paragraph 12 affects the result.
8. Then decide whether the individual’s status feeds into the wider test for a non-resident transaction under Schedule 9A.

For trust cases, an extra step is needed. You must first work out what kind of trust arrangement you have. Condition C only applies to a settlement where no beneficiary has a right to occupy for life or to income from the property. The manual expressly says different rules apply to bare trusts acquiring a new lease, and to settlements where a beneficiary does have one of those rights.

Example

Illustration: A residential property is bought for partnership purposes. Under the SDLT partnership rules, the partners are treated as entering into the transaction. One partner spent 190 days in the UK in the 365 days ending on completion. The other spent only 160 days by completion, although they later spend more than 183 days in the following year.

Because this is a partnership case, Condition B applies. That means the special paragraph 5 rule applies. The second partner is non-UK resident in relation to the transaction because they had not reached 183 UK days by the effective date. Their later UK presence does not change that result, and there is no refund mechanism based on later residence in a paragraph 5 case.

Why this can be difficult in practice

The main difficulty is spotting that the ordinary residence rule for individuals does not apply. A reader may assume that if an individual will meet the 183-day threshold by looking forward from the transaction date, that will be enough. In paragraph 5 cases, it is not.

Another difficulty is structural. In company, partnership and trust arrangements, the legal purchaser and the person whose residence must be tested may not be the same person. You need to identify exactly why an individual’s residence matters in the first place.

Trust cases can also be fact-sensitive. Condition C depends on the terms of the settlement and on whether any beneficiary is entitled to occupy for life or to income from the property. That requires careful reading of the trust terms. The manual also signals that some trust situations fall under different rules altogether.

Finally, the spouse and civil partner rule may affect the analysis, but its detailed operation is not set out on this page. That means this page should be read as part of the wider Schedule 9A framework rather than as a complete code on its own.

Key takeaways

• In certain company, partnership and trust cases, individuals are tested under a stricter SDLT residence rule in paragraph 5 of Schedule 9A.
• Under that rule, the individual must have 183 UK days in the 365-day period ending on the effective date itself; later days do not help.
• If paragraph 5 applies, the surcharge position is fixed at the effective date and HMRC says no refund is available based on later UK residence.

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 Surcharge: UK Residency Rules for Special Cases and Conditions

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