The art of taxation consists in so plucking the goose as to procure the largest quantity of feathers with the least possible amount of hissing.” – Jean-Baptiste Colbert (Louis XIV’s finance minister)

Until relatively recently the UK was a tax haven for overseas buyers by reason of potentially favourable treatment for CGT (Capital Gains Tax) and IHT (Inheritance Tax).

However, in recent years the UK Government has made a number of changes to the way in which overseas investors in the UK property market are taxed.

Whilst the introduction in 2016 of a 3% surcharge on SDLT for buyers with additional properties affected both resident and non-resident buyers, it necessarily impacted a greater proportion of non-resident buyers who are likely to own other properties overseas.

The Government is now consulting on an additional 1% SDLT surcharge for non-UK residents purchasing residential property in England or Northern Ireland. Scotland and Wales have their own regimes. This 1% surcharge will be on top of the existing SDLT rates.

The non-resident surcharge is likely to affect freehold and leasehold property but it is anticipated that existing reliefs will generally survive. Mixed use schemes, MDR (Multiple Dwelling Relief) and purchases of 6 or more dwellings should continue to be treated as non-residential and therefore outside the scope of the surcharge.

The proposed 1% surcharge will add a further layer of complexity to the SDLT regime in the UK. Property taxation for overseas purchasers is already an area in which many clients need specialist advice. It should not be treated as something which can simply be added to a buyer’s completion statement as an aside.

Adding 1% may sound routine but experts now report that there can be more than 32 permutations as to the rate of SDLT when buying residential property. In addition to the arithmetic, there will also be legal tests and definitions to be considered to determine whether a particular purchaser is a “non-resident”

Bartons has a long history of acting for non- resident purchasers of UK property, including those based in Hong Kong, South Africa and elsewhere and as a result we are able to guide you through the process to ensure that you are properly advised and confident in your purchase.

About The Author

Raymond Hayes is an author on property law and graduate of London and Oxford Universities, Raymond was formerly a partner with a leading Hong Kong firm. His specialties include investment properties, second homes and high value residential plot sales for developers.

Raymond can be contacted on