Expat Stamp Duty on UK Property

There are many property related taxes to pay in the UK. Stamp duty is an expensive one for everyone, but often more so for expats.

It first graced the British isles (in England) back in 1694 when it was used by William III and Mary II to fund the war against France.

And by the way, it had already been going nearly a century over on the European mainland having originated in Venice in 1604.

As a result, I think you can take a certain comfort from the fact that you are not alone when you pay it. Many paid stamp duty before you. Probably even more will pay stamp duty when you do, and though some wishful thinkers don’t agree, in all likelihood we’ll be paying stamp duty for a long time into the future (if not forever).

That said, just because others pay it, doesn’t mean they’ll pay the same as you. In fact, I’m sorry to say, if you are reading this from an overseas location, you’ll almost certainly pay more than UK residents when you buy property in the UK as an expat.

Let me explain.

UK surcharge just for us!

That’s because expats pay 2% over the standard rates UK residents pay.

Just to be clear. It works like this. Let’s say you and your sister buy identical apartments in an identical block. You are classed as non resident. If she pays 2% you pay 4. When she pays 1% you pay 3. And her paying 5% would mean you pay 7. You get the picture.

And are you ready for it? In most cases that’s not where it ends! That example assumes you are purchasing a property to live in and don’t already have one, which let’s face it, for most expats is highly unlikely.

Unless you are going home to become an ex-expat then you will usually be buying for investment purposes. Even more tax gets levied on second properties ie buy to lets (BTLs).

Additional dwellings

When buying “additional dwellings” like buy to lets or second homes there’s an additional 3% to pay.

To be fair, this applies to UK residents as well, but the crux of the matter remains the same.

Because of this, as an expat buying a property in the UK, you usually pay 5% over standard stamp duty rates. In other words:

Stamp duty usually comes with a 5% surcharge over standard rates for anybody classed as non resident and of course this includes expats

These stamp duty rates are shown below:

Stamp duty rates – standard & what expats can expect to pay

Property or lease premium or transfer value	Standard rate	Expat stamp duty rates*
Up to £250,000	Zero	5%
The next £675,000 (the portion from £250,001 to £925,000)	5%	10%
The next £575,000 (the portion from £925,001 to £1.5 million)	10%	15%
The remaining amount (the portion above £1.5 million)	12%	17%

Here’s a couple of examples showing how to work out how much stamp duty you need to pay.

The first one is based on standard rate stamp duty (i.e. you are a UK resident buying a house to live in). The second one is based on buying a buy-to-let as a non-resident. Be warned there’s quite a difference!

This example assumes you buy a house for £500K.

A UK resident buying a house to live in would pay £12.5K vs £37.5K for an expat buying an additional property.

This is calculated as follows:

UK resident

0% on the first £250K = £0
5% on the final £250K =£12.5K
Total £12.5K

Expat

5% on the first £250,000 = £12.5K
10% on the final £250,000 = £25K
Total £37.5K

So in short, the expat ends up paying three times as much and by the way that assumes the UK resident isn’t buying their first house. If they were the difference would be even greater.

Exceptions to the 2% expat surcharge

There are some exceptions to the 2% surcharge as follows:

• A. If you purchase a property with your (cohabiting) spouse or civil partner, and one of you is classed as a UK resident this surcharge does not apply.
• B. ‘Crown Employees’ such as members of the armed forces that reside overseas may be exempt from the 2% surcharge.
• C. Individual purchasers may be able to claim a refund of the 2% surcharge if they meet residency requirements within a 12-month period after the effective date of transaction.
• D.Some types of property purchase will be exempt from the 2% surcharge. These include:
  • Reversionary interests subject to a lease with more than 21 years to run
  • Acquisitions of leases for less than 21 years
  • Residential property that is subject to the circa 5% commercial property rates
  • Purpose built student accommodation

Item C (above) is significant here. If you plan on returning to the UK post property purchase, it might make sense to wait until you get back to the UK before you actually complete your property transaction.

And for your information, UK residents are those people who have been in the UK for 183 days or more consecutively within a 365 day period.

This must have begun no earlier than 12 months before and no later than 12 months after the property purchase.

When did the new stamp duty rules come into force?

The latest changes came into force in September 2022.