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December 2020 SDLT Briefing

December 2020 SDLT Briefing - New SDLT regime from 1 April 2021

In Focus: New 2% surcharge for non-UK residents purchasing residential property in England & Northern Ireland from 1 April 2021.

In this month’s briefing, Suzanne O’Hara looks at the proposed new 2% surcharge for non-UK residents and how this will impact conveyancers and their clients.

The government announced in the Spring 2020 Budget its intention to introduce a 2% surcharge on residential property purchases by non-UK residents from 1 April 2021. The draft legislation has now been released.

What is not affected:

  • Commercial/mixed use transactions

  • Purchase of 6 or more dwellings (but if MDR is claimed instead, 2% surcharge must be applied to the calculation)

  • Non-UK resident investors who flip properties (where sub-sale relief is available)

Who is likely to be affected?

  • Non-UK resident purchasers of residential property in England & Northern Ireland, together with conveyancers and other professionals who advise on such transactions.

The 2% surcharge will apply to all non-UK residents, including individuals, companies and trusts, and will impose an additional 2% on top of the rates applying to UK residents.

With the constant updating of the SDLT provisions, it is not surprising that there are areas of concern for practitioners; there are currently 7 different rates to apply depending on the specific circumstances of a land transaction and this is not including the additional 2% surcharge for non-residents which will be applied on top of each different set of rates.


The 2% surcharge will be applied on top of the rate for:

  • Standard rate residential property transactions

  • 3% additional dwellings & company purchases

  • 15% high value residential properties

  • Rates for First Time Buyers

  • Rates for rental element on leases

Therefore, the top rate of SDLT from 1 April 2021 for non-residents could be 17%. This will represent quite a significant increase in the SDLT payable on residential property transactions by non-UK residents.  

Where a transaction is entered into by joint purchasers, the 2% surcharge will apply if any of the purchasers are non-UK resident.

There are no specific reliefs to mitigate the 2% surcharge, but all the standard reliefs, e.g. group relief, sub sale relief etc will be available.

Care will be required for transactions involving non-resident and resident spouses. From 1 April 2021, where a non-resident spouse or civil partner of a UK resident individual buys a property with the UK resident individual, the non-resident surcharge does not apply. However, it is a requirement for both individuals to purchase the property. Therefore, if the non-resident spouse or civil partner purchases on his or her own, the surcharge will apply. It should also be noted that, although equity transfers between spouses are not subject to the 3% surcharge, they will be subject to the 2% surcharge where the spouse taking on the equity is non-UK resident.

The draft legislation has already received criticism for being overly complicated (an increasingly common complaint with regards to new SDLT legislation), in particular in relation to the rules to determine residence status for companies and individuals (which will need to be ascertained within a relatively short timeframe in order to comply with the SDLT reporting requirements).
Action before 31 March 2021

As non-UK residents will be faced with increased SDLT bills from 1 April next year, it may be an opportune time to take advantage of the current SDLT holiday, which applies from 8th July 2020 to 31 March 2021.

The holiday increases the lower thresholds from £125,000 to £500,000 for both standard rate transactions and transactions to which the 3% surcharge applies, as follows:

Relevant consideration SDLT rate Higher SDLT rate
Up to £500,00 0% 3%
£500,001 - £925,000 5% 8%
£925,001 - £1,500,000 10% 13%
£1,500,001 + 12% 15%

Non-residents (and UK residents) could currently save up to £15,000 for single property purchases over £500,000 and this saving will only be enhanced when compared to the SDLT payable once the new 2% surcharge is introduced. This has been illustrated in the example below.



Terry, a non-UK resident, wants to purchase a residential property in London for £1,000,000. The property is to be a second home, so that the 3% surcharge will apply. If the purchase completes before 31 March 2021, the SDLT will be £58,750. However, following the introduction of the 2% surcharge, the SDLT liability will be £93,750, an increase of £35,000!


SDLT is becoming increasingly complex. If in doubt, seek professional advice. As always, our team of specialist tax advisers are at hand to assist you with all property tax-related matters. Get in touch via our SDLT advisory service or emailing