On 12th February 2019 HMRC published their consultation in relation to a proposed 1% surcharge that could apply to purchases of residential properties in the UK by foreign buyers.  The full consultation document can be found here


It is proposed that individuals will be considered to be ‘foreign’ if they have spent less than 183 nights in the UK in the 12 months prior to completion of their purchase, triggering the requirement for them to pay a 1% Stamp Duty Land Tax (SDLT) surcharge. In the event that the individual then spends more than 183 nights in the UK in the 12 months following completion of their purchase, they will be able to claim a refund for the SDLT surcharge paid.

There are proposed exemptions for Crown employees to ensure, for example, that armed forces personnel stationed overseas are not subject to the surcharge.


For companies, whether or not it is foreign ‘foreign’ will be determined by whether it is a UK incorporated limited company or where the company’s ‘effective management and control resides’. It is proposed that the rules will also affect ‘close’ UK resident company controlled by foreign participators.


The position with regard trust arrangements will be more complex and will depend on the form of the trust, the potential interest held by the beneficiary, as well as the residency of the trust itself.

Generally, under a bare trust arrangement if the beneficiary is ‘foreign’ the surcharge will apply, whereas for a discretionary Trust, it will be determined by the residency of the Trust itself.

Partnerships and joint purchases

It is proposed that if any partner/joint party is ‘foreign’ the surcharge will apply to the whole transaction.


The consultation runs until 6 May 2019. If the proposals are introduced it will result in further complications in determining the level of SDLT payable on the purchase of residential properties. The definition of ‘foreign’, particularly for individuals, is likely to cause confusion as a purchaser who is ‘foreign’ at the commencement of a transaction may not be deemed so at completion. It will no doubt require fresh procedures to be introduced by conveyancers to verify how many nights a purchaser has spent in the UK before completion.

This proposal is only at consultation stage and if implemented into the increasingly complex SDLT regime, it is hoped that HMRC will provide supplemental guidance as they did when the Higher Rate for second/investment residential properties was introduced.

For advice on the buying or selling of property including what Stamp Duty Land Tax is owed, please get in touch with Farleys’ residential property team on 0845 287 0939 or email us through our online contact form.