5 key facts about Stamp Duty Land Tax for Brits in Hong Kong

30/06/2022

I’m often surprised at the quizzical looks I get when I’m talking about property purchase in the UK and refer to the Stamp Duty Land Tax (SDLT).

With this in mind, I thought it was worth giving you an overview of how SDLT works and its potential implications.

Researching this article, I was amused to discover that the first Stamp Duty was introduced in 1694 – for just four years to fund a war on France. The first property-related Stamp Duty was introduced in 1808. More than 200 years later, through various iterations, it’s still with us.

If you’re a British expat in Hong Kong and are planning to buy residential property in the UK, here are five key facts you need to know about SDLT.

1. SDLT applies on all property purchase in England and Northern Ireland

You will typically pay SDLT if you buy a residential property over a certain value in England and Northern Ireland.

The devolved governments of Wales and Scotland have similar schemes to SDLT, with variations in the charges and thresholds.

SDLT is payable when you buy any type of property – leasehold or freehold.

2. The amount you pay is based on the property purchase price

To correct a common misconception, SDLT is based on the purchase price of the property you’re buying rather than the amount of your mortgage loan.

The property value threshold above which SDLT starts to apply is currently £125,000. There are then a series of bands that determine the total amount of tax payable.

First-time buyers don’t pay Stamp Duty if the purchase price is below £300,000, with additional relief available up to £500,000 in high-price areas such as London.

Also note that there is a Stamp Duty surcharge of 3% on additional properties. This means that there are different rates for purchase of your main residential property and other properties, such as holiday homes and buy-to-let properties.

It’s important to note that the amount you pay is based on each band rather than the total amount, so you’ll pay different rates for each part of the property’s value that falls into each bracket.

For example, if you purchase a property for your own residential use for £750,000 (and you’re not a first-time buyer) you will pay nothing on the first £125,000, 2% on the next £125,000, and 5% on the remaining £500,000. This would result in a Stamp Duty bill of £27,500.

If you purchase a similar value property that you don’t intend to live in, you’ll pay 3% on the first £125,000, 5% on the next £125,000, and 8% on the balance – meaning a total charge of £50,000.

3. There’s also a surcharge if you’re a non-resident

If you’re currently living overseas and thinking of buying property in the UK, you also need to be aware of the non-resident surcharge.

Since April 2021, non-UK residents buying residential property will need to pay an extra 2% on top of the appliable SDLT rates you’ve read in the above table. This applies whether you’re buying a home or an additional property.

There’s a useful calculator on the HMRC website that can help you work out the amount of SDLT payable in various scenarios.

4. It’s possible to reclaim the non-resident surcharge

In certain circumstances, you can apply for a refund of the non-resident surcharge.

For example, if you’re based in Hong Kong and returning to the UK to live, you can reclaim the surcharge once you’ve spent 183 days out of a continuous 365-day period back in the UK after the date you purchased the property.

Note that you only have two years from the date of purchase – usually the completion date – to apply for your refund. This clearly means it’s important to plan ahead, if you are intending to return to the UK and purchase property as part of that move.

5. How and when to pay

The full amount of SDLT you owe – including the non-resident surcharge if applicable – must be paid to HMRC within 14 days of the purchase completing.

In most cases, your solicitor will pay this as part of the completion process on your behalf, and then include it as part of their conveyancing fees.

Get in touch

If you have any queries or need guidance regarding buying property in the UK, please get in touch.

You can contact us by email or, if you prefer to speak to us, you can reach us in the UK on +44 (0) 208 0044900 or in Hong Kong on +852 39039004.

Sign up to our newsletter

    Contact us

      privacy I have read and agree to the Privacy Policy