SDLTM09890 - SDLT - increased rates for non-resident transactions: Non-resident in relation to a chargeable transaction: Individuals, special cases - para 5 Sch 9A FA03

(All legislative references are to Sch 9A FA03 unless otherwise stated)

Special rules apply in determining whether an individual is UK resident in relation to a chargeable transaction where any of the purchasers is other than an individual.

For the purposes of the surcharge, where paragraph 5 applies, 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 the period that begins with the day 364 days before the effective date of the transaction, and ends with the effective date of the chargeable transaction (paragraph 5(1)); and

  • any of conditions A to C is met in relation to the transaction (paragraph 5(2)).

As the period in which UK residence in relation to the transaction needs to be established ends on the effective date of the transaction, refunds of the surcharge are not possible in cases where paragraph 5 applies.

As per the basic rule for individuals:

  • 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 5(6));
  • days spent in the whole of the UK are relevant for the purposes of the residence test; and
  • the special rule for spouses and civil partners of UK residents set out at paragraph 12 applies.

Condition A (paragraph 5(3)) is that the purchaser is, (or if there is more than one) the purchasers include, a company or a person acting as a trustee of a unit trust scheme. For example, paragraph 5 will apply where the non-UK control test set out at paragraphs 9 and 10 is used to establish whether an individual participator who controls a company purchaser is UK resident.

Condition B (paragraph 5(4)) is that the purchaser is, or the purchasers include, an individual who is treated as entering into the transaction by virtue of paragraph 2 Sch 15 FA03. This treats a land transaction entered into for the purposes of a partnership as being entered into by or on behalf of the partners, and not by or on behalf of the partnership. See SDLTM33100 onwards for more details on the general SDLT rules for partnerships.

Condition C (paragraph 5(5)) is that:

  • the purchaser is, or the purchasers include, an individual who is acting as a trustee of a settlement; and
  • under the terms of the settlement, no beneficiary is entitled:
    • to occupy the dwelling or dwellings for life; or
    • to income earned in respect of the dwelling or dwellings.

Different rules apply where the purchaser is a person acting as a trustee of a bare trust acquiring a new lease, or of a settlement where a beneficiary is entitled to occupy the dwelling or dwellings for life, or to income earned in respect of the dwelling or dwelling. See SDLTM09940 for more details.

Example 1

Camille and Joshua are the partners at Rousseau’s LLP. They are neither married nor civil partners to each other. Rousseau’s purchases a freehold residential property in England on 1 June 2025 for £600,000. Condition B applies.

Between 2 June 2024 and 1 June 2025, Camille spent 200 days in the UK. She is therefore UK resident in relation to the transaction.

Between 2 June 2024 and 1 June 2025, Joshua spent 150 days in the UK. Between 2 June 2025 and 1 June 2026, Joshua spent 200 days in the UK. Under the basic rule in paragraph 4, Joshua would be UK resident in relation to the transaction. However, as Condition B applies, Joshua is non-UK resident under the residence test at paragraph 5.

As Joshua is non-UK resident in relation to the transaction, the condition set out in paragraph 2(1)(a) applies, and the purchase is a “non-resident transaction” as all of the remaining conditions in paragraph 2(1) are also met. See SDLTM09860 for more details on the meaning of non-resident transactions.

Example 2

Freya is a trustee of the Mikaelson family trust. Kol is one of the beneficiaries of the trust, and has been accepted to Queen’s University in Belfast. Freya uses trust funds to purchase a freehold residential property on 1 August 2023 for £400,000, near the university for Kol to live in during his course. The property will be sold upon completion of the course. Condition C applies.

Between 2 August 2022 and 1 August 2023, Freya spent 277 days in the UK. She is therefore UK resident in relation to the transaction, and the purchase is not liable to the surcharge.