Stamp Duty Land Tax (SDLT) is a subject that many foreign investors should know but most of them do not. For this reason, we have prepared a simple guide explaining everything you need to know about stamp duty for those who will invest in property from Turkey to the UK.
What is Stamp Duty? Stamp Duty is a tax paid to HMRC (the Exchequer) when you buy a house, flat or other type of property in the UK. This tax is calculated as a percentage of the purchase price (you can see the tax brackets and rates below in this guide).
What are the New Stamp Duty Rates for Foreign Investors? As a foreign investor and non-UK resident, a surcharge of %2 applies. This additional %2 is effective from 1 April 2021 and applies to residential property sales in the UK and Northern Ireland. This fee applies to non-resident buyers regardless of the type of buyers (e.g. company or individual). For international buyers, this new surcharge applies alongside the existing Stamp Duty of %3 on the purchase of a second home. This means that for a foreign investor who owns another property worldwide, %5 is added to the standard Stamp Duty payment.
Is there any exemption? The new surcharge of %2 does not apply to property purchases of the following types
- When buying an apartment for a student
- When buying residential property subject to commercial property rates of approximately %5
When is the stamp duty paid? Stamp Duty must be paid to HMRC no later than 14 days after completion of the property.
What happens when there is more than one buyer? If the property purchase is made jointly with a spouse or civil partner (and the purchasers were living together at the date of purchase), only one of the purchasers needs to be resident in the UK to avoid the new surcharge. For other joint purchases (between friends, family or business partners), all buyers must be resident in the UK to avoid the new surcharge.
What are the residency requirements to pay low Stamp Duty? An individual is considered to be a UK resident if they have been in the UK for at least 183 days of the last year. This 365-day period starts 12 months before and ends 12 months after the transaction.
If I become a resident, can I get the stamp duty back? If an individual meets the residency conditions within 12 months after the date of purchase, they may be entitled to a refund. The buyer will have one year for a refund of the 2% surcharge.
How much is the Stamp Duty for a foreign/non-resident property investor? The stamp duty brackets for non-UK residents are as follows.
For example, on a property purchase worth £250,000 you pay £15,000 Stamp Duty to HMRC.
So How Can Investment UK Help? If you are looking to invest in property in the UK and you or your company are not resident in the UK, the Investment UK team can advise you on whether the surcharge will apply and, if so, what you can do to reduce the Stamp Duty surcharge. For further assistance or enquiries please contact us.
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