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Novice Karate Group (ages 8 & up)

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Frank Titskey
Frank Titskey

Buying Property In Uk Non Resident

The rates are 2 percentage points higher than those that apply to purchases made by UK residents. This surcharge applies to purchases of both freehold and leasehold property, as well as increasing the Stamp Duty Land Tax payable on rents on the grant of a new lease.

buying property in uk non resident

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The garden and grounds of the property, including any buildings or structures, for example a detached garage, are also included, along with any land that exists for the benefit of the property. However, the surcharge does not apply to a transaction in such a building or land without the purchase of the actual residential property.

The test used to establish whether a buyer is non-UK resident in relation to the transaction depends on who the buyer is. Nationality, citizenship or residence status under the UK Statutory Residence Test are not relevant for this purpose.

The rules apply to each person, natural and non-natural, who is buying the property. If any of you individually are non-UK resident in relation to the transaction, then all buyers are treated as non-UK resident in relation to the transaction.

Although the surcharge only applies to non-resident transactions in England and Northern Ireland, days spent in the whole of the UK count 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 they are situated in the UK at the end of that day.

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.

Elijah and Hayley are married and live together in the USA. They jointly purchase a freehold residential property in Northern Ireland on 1 June 2025 for 950,000. Neither is acting as a trustee of a settlement.

Elijah is UK resident in relation to the transaction. Therefore, Hayley is also treated as UK resident in relation to the transaction, even though she spent less than 183 days in the UK during the 12 months prior to the purchase.

Special rules apply to UK resident companies which are under the direct or indirect control of non-UK resident persons. Such companies are treated as non-resident in relation to the transaction if the company:

As Camille and Joshua are buying the property together as partners in a partnership and Joshua is non-UK resident in relation to the transaction, Camille is also treated as non-UK resident in relation to the transaction.

Settlements under a unit trust scheme are treated differently from other trusts. For Stamp Duty Land Tax purposes, unit trust schemes are treated as if the trustees were a company, and the rights of the unit holders were shares in the company. Where the trustee of a unit trust scheme is the buyer, the residence status of the trustees is used to determine whether the purchase is a non-resident transaction.

If the buyer is a financial institution and the transaction is part of an alternative property finance scheme, then the residence status of the financial institution is determined by applying the appropriate Stamp Duty Land Tax residence test to the person taking out the finance.

Fifi purchases a freehold residential property in England on 26 October 2022 for 700,000. Fifi does not already own another property, so the higher rates on additional dwellings do not apply to her.

In the 12 months prior to the transaction, Fifi spent 77 days in the UK. This was all during the period 1 July to 26 October 2022. She was therefore non-UK resident in relation to the transaction and paid the surcharge on her purchase.

The vast majority of customers required to make a Stamp Duty Land Tax return will have taken advice from professional advisers such as solicitors and conveyancers on their legal responsibilities when buying a property. Part of this may include knowing whether and to what extent they were present in the UK before their purchase and the impact this might have on their liability to the non-resident surcharge.

This note highlights some of the basic tax and legal considerations that form part of residential property purchases in the UK. It should act as an introduction to the topic to help inform your detailed discussions with your independent tax and legal advisors.

There are two key principles to note. First, you will not be legally bound to acquire a property until you exchange contracts with the vendor. The bulk of the work relating to a purchase is completed before the exchange of contracts. You will have to pay a deposit on exchange of contracts.

In the UK there are two main forms of home ownership, freehold or leasehold. If you own a freehold house you normally own the property and the land it sits on. You are responsible for all maintenance and can make alterations to the property as you wish (subject to any planning permissions required).

If you own a leasehold, you do not own the land the property sits on. You will have to comply with any restrictions found in the lease (which is the agreement between you and the freeholder of the property). You are unlikely to be able to make structural alterations to the property and will likely have to contribute to the maintenance of the property, sometimes through a service charge. Flats are usually sold as leaseholds. The length of the lease is often 99 or 125 years and as this period reduces, the value of the leasehold is likely to reduce too. It is sometimes possible to extend a lease.

Often UK resident non-domiciled individuals will have a pool of so-called clean capital that they can bring to the UK without a tax charge which they use to fund the deposit. You will need to consider with your tax advisor whether it would be tax efficient for you to take out a mortgage against the UK property (see the inheritance tax section below for more information on this).

If you intend to remain non-UK resident there will be less complexity around how best to fund the deposit as there is unlikely to be a UK tax issue when bringing those funds here. However, you should still take advice on the UK inheritance tax consequences of the arrangements, together with other UK tax considerations resulting from the purchase and future sale of the property and any rental income you might receive from your tenants if you rent it out.

Once you have found the property you were looking for and have commenced the preliminary work with your conveyancer, it is worthwhile taking tax and legal advice to decide the most sensible way for you to hold the property given your personal circumstances and the objectives you have for the property. In recent years we have seen an increasing trend towards direct ownership, rather than ownership through a company, particularly where the property is intended for personal use.

There may remain some limited circumstances where corporate or trust ownership might make sense. If the property is held through a company or trust structure, the tax considerations can be complex and you should ensure that you obtain advice from a UK tax advisor.

The main exposure to UK inheritance tax for non-UK residents and non-UK domiciled individuals will often be as a result of their ownership of UK residential property. This is often a key area that they wish to seek tax advice on.

It should be noted that property passing between spouses is generally exempt from inheritance tax (subject to certain limitations where the property passes to the surviving spouse and they are a non-UK domiciled individual).

Your exposure to inheritance tax in the UK can be mitigated by securing a mortgage against the property upon acquisition. In addition, you might consider life insurance to cover any inheritance tax exposure in respect of the equity you own in the property.p

If you do not sell your former main home on the same day as you acquire your new UK property, you will be required to pay the additional 3% SDLT charge, but you will have up to three years to sell your former home if you wish to reclaim the additional tax. Once it is sold, you can reclaim the additional 3% SDLT charge.

The purchaser and their spouse or civil partner are treated as one person for the purposes of the additional 3% rate. So if your spouse owns a residential property anywhere else in the world and you are purchasing the new UK residential property, you will be treated as one person and the additional 3% SDLT charge will still apply.

Since 1 April 2021, an additional 2% SDLT surcharge on non-UK residents purchasing residential property in England and Northern Ireland has applied. This will in effect mean that if you are purchasing a UK property that will not be you main home (i.e. you already own another property), you will pay the 2% non-UK resident surcharge plus the 3% SDLT charge on the purchase of additional homes. In this example, the top rate of SDLT on the value of your property purchase above 1.5 million would be 17%.

If you buy a property through a company, and that property is worth more than 500,000, a flat rate of 15% SDLT will apply. There are some limited exemptions from the flat 15% SDLT rate where, for example, the acquisition is for the purpose of letting as part of a rental business or as part of a property trading or development business.

If you buy the shares in a property holding company, you will not pay SDLT. However, there are a number of potential downsides to acquiring the shares in a property holding company that you should explore with your tax and legal advisors, not least, the Annual Tax on Enveloped Dwellings (outlined below).

In practice, if you are non-UK tax resident, it may be difficult for you to benefit from PPR. This is because in order for a property to qualify for PPR you must have spent at least 90 midnights in the tax year in the UK property or in another UK property which you own.

US citizens who purchase UK residential property should give careful thought to their tax position in both the US and UK. In particular, they may be subject to US tax on any gain, in addition to any UK tax payable on the gain (if it is not fully exempt from UK tax under PPR). However, it should be possible to credit any UK tax paid against the US tax liability to prevent double taxation of the gain. 041b061a72


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