If you’re an expat thinking of buying a property in the UK, you need to be aware of the Stamp Duty Land Tax for Expats (SDLT) rules that apply to you. SDLT is a tax that is payable on most property purchases in the UK. This tax can be a significant expense, so it’s important to understand how it works, how much you might have to pay, and what exemptions or reliefs are available to expats.
What is Stamp
Duty Land Tax?
Stamp Duty Land Tax is a tax that is payable on most property purchases in the UK, including buying a home or a piece of land. The tax is calculated based on the value of the property and is usually paid by the buyer. The rates of Stamp Duty Land Tax for Expats can vary depending on several factors, such as whether the property is residential or commercial, the price of the property, and whether the buyer is a first-time buyer.
SDLT is administered by HM Revenue & Customs (HMRC), and it is payable within 14 days of completion of the purchase. Failure to pay the tax on time can result in penalties and interest charges.
Stamp Duty Land Tax for Expats
Expats who are buying a residential property in the UK as their main residence are subject to the same SDLT rules as UK residents. The rates of SDLT are currently based on a sliding scale, with no SDLT on the first £500,000 of the purchase price. This threshold was set to reduce to £250,000 from October 1st, 2021.
In addition to the sliding scale, expats should be aware of the additional 2% SDLT surcharge that is applicable to non-UK residents. The surcharge is payable on top of the normal SDLT rates, and applies to any purchase of a residential property by a non-UK resident. This surcharge was introduced in 2021 by the UK government to encourage the UK’s property market and deter overseas buyers from buying properties and leaving them empty.
However, there are some exemptions to the Stamp Duty Land Tax surcharge for non-UK residents. For example, if you are a non-UK resident but you are a Crown employee (such as a diplomat), you will not be subject to the 2% SDLT surcharge. Similarly, if you are a non-UK resident but you have been a UK resident for at least one of the previous two years, you will not be subject to the surcharge.
If you are an expat buying a non-residential property in the UK, the SDLT rates are different from those for residential property. For non-residential properties, there
is no SDLT payable on the first £150,000 of the purchase price, with a 2% SDLT rate applied to the portion of the purchase price between £150,001 and £250,000. The SDLT rate then rises to 5% on the portion of the purchase price above £250,000.
There are also some reliefs and exemptions available for expats who are buying property in the UK. For example, if you are a first-time buyer and the property you are buying is your main residence, you may be eligible for relief from SDLT. This relief will enable you to pay no SDLT on the first £300,000 of the purchase price and a reduced SDLT on the portion of the purchase price above £300,000. However, to qualify for this relief, the purchase price of the property must not exceed £500,000.
In addition, if you are buying a property as part of your job or business, you may be eligible for relief from SDLT. For example, if you are buying a property to use as a commercial office or for rental purposes, you may be eligible for relief from SDLT. However, to qualify for this relief, the property must be used for commercial purposes only and not as your main residence.
Residential Property
If you’re buying a residential property in the UK as an expat, you will need to pay Stamp Duty Land Tax for Expats. The rates of SDLT are the same for expats as for UK residents. The current rates are as follows:
- No SDLT on the first £500,000 of the purchase price
- 5% SDLT on the portion of the purchase price between £500,001 and £925,000
- 10% SDLT on the portion of the purchase price between £925,001 and £1.5 million
- 12% SDLT on the portion of the purchase price over £1.5 million
Non-Residential Property
If you’re buying a non-residential property in the UK as an expat, you will also need to pay Stamp Duty Land Tax for Expats. The rates of SDLT are different for non-residential property than for residential property. The current rates are as follows:
- No SDLT on the first £150,000 of the purchase price
- 2% SDLT on the portion of the purchase price between £150,001 and £250,000
- 5% SDLT on the portion of the purchase price over £250,000
Reliefs and Exemptions
There are some reliefs and exemptions available to expats who are buying property in the UK. For example, if you’re a first-time buyer and the property you’re buying is your main residence, you may be eligible for relief from Stamp Duty Land Tax. Similarly, if you’re buying a property as part of your job or business, you may be eligible for relief from SDLT.
It’s important to note that these reliefs and exemptions have specific criteria and conditions that must be met in order to qualify. You should consult with a tax professional or solicitor to determine if you are eligible for any of these reliefs or exemptions.
Conclusion
In summary, expats who are buying property in the UK are subject to the same SDLT rules as UK residents. SDLT is payable on most property purchases in the UK and is calculated based on the value of the property. The rates of SDLT can vary depending on several factors, such as whether the property is residential or non-residential, and the price of the property. If you would like to speak to a professional, click the link below to request an introduction.
