SDLTM09880 - SDLT - increased rates for non-resident transactions: Non-resident in relation to a chargeable transaction: Individuals, basic rule - para 4 Sch 9A FA03

(All legislative references are to Sch 9A FA03)

The test to determine what constitutes a non-UK resident individual for the purposes of the surcharge is different to the existing Statutory Residence Test (SRT) used for other taxes. The SRT involves several interconnected tests which consider closeness of connection to the UK, as well as periods of time spent in the UK over the course of a tax year. The nature of SDLT as a transaction tax means that the concept of “tax year” is not relevant.

For the purposes of the surcharge, an individual is UK resident in relation to a chargeable transaction, if the individual is present in the UK on at least 183 days during any continuous 365-day period that falls within the “relevant period” (paragraph 4(1)).

The relevant period:

• begins with the day 364 days before the effective date of the transaction (paragraph 4(2)(a)); and
• ends with the day 365 days after the effective date of the transaction (paragraph 4(2)(b)).

However, the SDLT return for a chargeable transaction must be submitted to HMRC within 14 days of the effective date of the transaction. At the date of submission, if an individual has spent less than 183 days in the UK, the SDLT return must be prepared on the assumption that the individual is non-UK resident. The purchase will be a “non-resident transaction” if all of the conditions in paragraph 2(1) are met (see SDLTM09860 for more details) and the surcharge will be due.

If the individual subsequently satisfies the residence requirement in paragraph 4(1) after the effective date of the transaction, they will be able to amend the SDLT return to notify HMRC that the transaction is ultimately not liable to the surcharge and apply for a refund of the 2% surcharge paid. See SDLTM09960 for more details on completing and amending SDLT returns where an individual only becomes UK resident in relation to the transaction after the return is delivered.

It is important to note that although the surcharge only applies to non-resident transactions in England and Northern Ireland, days spent in the whole of the UK are relevant for the purposes of the residence test, not just days spent in England or Northern Ireland.

An individual is present in the UK on a particular day if that individual is situated in the UK at the end of that day (paragraph 4(4)).

This basic rule only applies to chargeable transactions where all of the purchasers are individuals. Different rules apply in other scenarios (paragraph 4(3)). These scenarios are set out in paragraph 5. See SDLTM09890 for more details.

Special rules also apply where spouses or civil partners are joint purchasers in relation to a transaction. See SDLTM09885 for more details.

Examples – sole purchasers

Tunde lives in Canada. He purchases a freehold residential property in England on 1 June 2025 for £800,000. Between 2 June 2024 and 1 June 2025, Tunde spent 200 days in the UK. He is therefore UK resident in relation to the transaction.

Parvati lives in South Africa. She purchases a 120 year leasehold interest in a residential property in England on 1 June 2025 for £300,000. Between 2 June 2025 and 1 June 2026, Parvati spent 200 days in the UK. She is therefore UK resident in relation to the transaction under paragraph 4(1). However, the SDLT return for this transaction must be submitted to HMRC by 15 June 2025. At the date of submission, Parvati has spent less than 183 days in the UK. Hence, as all of the conditions in paragraph 2(1) are met in relation to the transaction on the date of submission, the purchase is treated as a non-resident transaction and the SDLT return is completed on the basis that the surcharge is due. Once Parvati satisfies the residence requirement in paragraph 4(1) after the effective date of the transaction, she will be able to amend the SDLT return and apply for a refund of the 2% surcharge paid.

Mohammed lives in France. He purchases a 99 year leasehold interest in a residential property in England on 1 June 2025 for £200,000. Between 1 February and 1 June 2025, Mohammed spent 100 days in the UK. Between 2 June 2025 and 31 January 2026, Mohammed spent 85 days in the UK. He is therefore UK resident in relation to the transaction under paragraph 4(1). However, as in Parvati’s case, Mohammed spent less than 183 days in the UK at the date of submission of the SDLT return for this transaction. The SDLT return is therefore prepared on the assumption that Mohammed is non-UK resident and the surcharge is due. Once Mohammed reaches the 183 days residence threshold, he will be able to amend the SDLT return and apply for a refund of the 2% surcharge paid.

Joint purchasers

See SDLTM09875 for details of how joint purchasers are treated for the purposes of the surcharge.

It is important to note that if there are two or more purchasers, the continuous 365-day period can be different for each purchaser, i.e. the transaction will only stop being a non-resident transaction at the point when every purchaser has met the requirement of being in the UK for at least 183 days out of 365, within the relevant period.

Example 1

Elijah, Klaus and Hayley live in the USA. They jointly purchase a freehold residential property in Northern Ireland on 1 June 2025 for £950,000.

Between 2 June 2024 and 1 June 2025, Elijah spent 183 days in the UK, and is therefore UK resident in relation to the transaction under paragraph 4(1).

Between 2 June 2025 and 1 June 2026, Klaus spent 183 days in the UK. He is therefore UK resident in relation to the transaction under paragraph 4(1).

Between 1 August 2024 and 31 July 2025, Hayley spent 275 days in the UK. She is therefore UK resident in relation to the transaction under paragraph 4(1).

As all three purchasers are UK resident in relation to the transaction under paragraph 4(1), the purchase will ultimately not be liable to the surcharge. However, the SDLT return for the transaction must be submitted to HMRC by 15 June 2025. At the date of submission, Klaus has spent less than 183 days in the UK, hence not all three purchasers are UK resident in relation to the transaction on the date of submission. The SDLT return must therefore be prepared on the assumption that the purchasers are non-UK resident. Hence, as all of the conditions in paragraph 2(1) are met in relation to the transaction on the date of submission, the purchase is treated as a non-resident transaction and the SDLT return is completed on the basis that the surcharge is due. Once Klaus satisfies the residence requirement in paragraph 4(1) after the effective date of the transaction, the SDLT return can be amended and a refund of the 2% surcharge claimed.

Example 2

Finn, Henry and Caleb live in the USA. They jointly purchase a freehold residential property in Northern Ireland on 1 June 2025 for £950,000.

Between 2 June 2024 and 1 June 2025, Finn, spent 183 days in the UK, and is therefore UK resident in relation to the transaction.

Between 2 June 2025 and 1 June 2026, Henry spent 183 days in the UK. He is therefore UK resident in relation to the transaction.

Between 1 August 2024 and 31 July 2025, Caleb spent 100 days in the UK. He also spent 3 days in the UK on 10-13 June 2024, and 80 days in the UK between 2 August 2025 and 1 June 2026. Although he has spent 183 days in the UK during the relevant period 2 June 2024 to 1 June 2026, this has not been within a continuous 365-day period. He is therefore non-UK resident in relation to the transaction.

The SDLT return for the transaction must be submitted to HMRC by 15 June 2025. At the date of submission, both Henry and Caleb have each spent less than 183 days in the UK, hence the SDLT return is prepared on the assumption that the purchasers are non-UK resident and the surcharge is paid. Although Henry subsequently satisfies the residence requirement in paragraph 4(1) after the effective date of the transaction, Caleb does not.

As not all three purchasers are UK resident in relation to the transaction, the condition set out in paragraph 2(1)(a) applies. The purchase is a “non-resident transaction” as all of the remaining conditions in paragraph 2(1) are also met. Therefore, a refund of the surcharge cannot be claimed. See SDLTM09860 for more details on the meaning of non-resident transactions.