Do you pay higher rates of SDLT if you own a small share of a property abroad worth less than £40,000?

Introduction

People often ask whether owning a property outside the UK affects Stamp Duty Land Tax when buying a home in England or Northern Ireland. This commonly arises where the buyer owns only a share of an overseas property, often with a family member, and wants to know whether the higher rates for additional dwellings apply.

The key issue is usually whether the buyer’s interest in the other dwelling is worth at least £40,000 at the effective date of the UK purchase. If it is below that threshold, the higher rates will usually not apply on that ground.

The Question

A buyer is purchasing a residential property in the UK for £515,000. The buyer already owns a 50% share in a residential property overseas, jointly with a family member. The total value of that overseas property is about £43,500, so the buyer’s 50% share is worth about £21,750.

The question is whether that overseas ownership means the buyer must pay the higher rates of Stamp Duty Land Tax for additional dwellings.

Nick’s Explanation

Nick’s explanation was that the higher rates can apply where a person buys a dwelling in England or Northern Ireland while already owning another dwelling anywhere in the world. However, one of the statutory conditions is that the buyer’s interest in the other dwelling must be worth £40,000 or more.

In anonymised form, his reasoning was:

“The extra tax might apply if you buy a home and already own another home. Your other home can be anywhere in the world. A key rule is about the value: the extra tax only applies if your share of the other home is worth £40,000 or more.”

Applying that to the facts given, Nick concluded that if the buyer’s overseas share is worth about £21,750, that is below the £40,000 threshold, so the higher rates would not normally apply on those facts.

The Law

Stamp Duty Land Tax is charged under Finance Act 2003. The higher rates for additional dwellings are mainly set out in Schedule 4ZA to Finance Act 2003.

In broad terms, the higher rates can apply where, at the end of the day of the transaction:

• the buyer has purchased a major interest in a dwelling in England or Northern Ireland;
• the chargeable consideration is £40,000 or more;
• the dwelling is not subject to a lease with more than 21 years left to run granted on a premium of less than £40,000; and
• the buyer has a major interest in another dwelling worth £40,000 or more, and that other dwelling is not being replaced as the buyer’s only or main residence.

For these purposes, an interest in a dwelling abroad can count. The legislation is not limited to UK property. Overseas residential property can therefore trigger the higher rates if the statutory conditions are met.

The £40,000 test is important. It applies to the buyer’s interest in the other dwelling. If the buyer owns only a share, the value of that share must be considered.

A “major interest” will usually include a freehold or a leasehold interest with more than 21 years to run.

Analysis

Step 1: The UK purchase is of a dwelling for £515,000.

That is plainly above the SDLT filing threshold and above the £40,000 figure used in Schedule 4ZA.

Step 2: The buyer already owns an interest in another dwelling.

The overseas property is residential property and the buyer owns a 50% share. Because the legislation looks at dwellings anywhere in the world, the fact that the property is outside the UK does not prevent it from being relevant.

Step 3: The value of the buyer’s interest in the overseas dwelling must be tested.

On the facts provided, the whole overseas property is worth about £43,500. The buyer’s 50% share is therefore worth about £21,750.

That is below £40,000.

Step 4: Apply the statutory threshold.

If the buyer’s interest in the other dwelling is worth less than £40,000 at the effective date of the UK transaction, the condition for the higher rates based on ownership of another dwelling is not met.

On the facts given, that means the overseas property should not trigger the higher rates.

Step 5: Check whether any other issue changes the result.

The answer depends on the valuation being correct and on the overseas interest being accurately described. It also assumes there are no other residential properties or dwelling interests owned by the buyer that would need to be counted.

If the buyer owns any other dwellings, or if the valuation of the overseas share is actually £40,000 or more when properly assessed in sterling at the relevant date, the position could change.

It is also important not to confuse this issue with claims that a property is uninhabitable or not suitable for use as a dwelling. In that area, the threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. That case makes clear that the condition required before a property falls outside the definition of a dwelling is demanding. But that is a different issue from the £40,000 threshold considered here.

Outcome

On the stated facts, the buyer would usually not pay the higher rates for additional dwellings merely because of the 50% share in the overseas property.

That is because the buyer’s share is worth about £21,750, which is below the £40,000 threshold in Schedule 4ZA to Finance Act 2003.

So, assuming the figures are correct and there are no other relevant property interests, the buyer would generally be charged SDLT at the ordinary residential rates rather than the higher rates.

Practical Steps

To assess the position properly, a buyer should:

• confirm the market value of the overseas property at the effective date of the UK purchase;
• calculate the value of their exact share, not just the value of the whole property;
• convert the value into pounds sterling using a sensible and supportable exchange rate at the relevant date;
• check whether the overseas interest is a major interest for SDLT purposes;
• review whether they own any other dwellings or partial interests anywhere in the world;
• keep evidence of valuation and currency conversion in case HMRC asks for support.

If the valuation is close to £40,000, or if the ownership structure is unusual, the buyer should examine the statutory wording carefully before filing the SDLT return.

Conclusion

Owning a share of an overseas property does not automatically mean the higher rates of SDLT apply. The buyer’s own interest in that other dwelling must usually be worth at least £40,000. Where a 50% share is worth only about £21,750, the higher rates should generally not apply on that basis.

Legal References Used

• Finance Act 2003
• Finance Act 2003, Schedule 4ZA
• Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799

This page was last updated on 22 March 2026.

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