We live abroad but plan to buy a UK house to rent out. What stamp duty will we pay?

Q My husband and I are planning to buy a house together but we’re really confused about what stamp duty we’ll need to pay.

We’re both British but we are currently living and working abroad so aren’t residents. I’m aware that we’ll need to pay a higher rate of stamp duty because of this. We plan to live abroad for at least another four to six years but would like to buy a property in the UK now. We plan to rent out the house until we return, when the house will become our family home.

We’re confused about whether this means we need to pay the additional 3% for buy-to-let or second homes. It will be our only property (although my husband has previously owned a flat in the UK, this was sold more than a year ago). We do not own property abroad. The house we want to buy will cost £500,000.
TH

A The test for determining whether you pay the extra 3% in stamp duty land tax (SDLT) is not the nature of the property but how many properties you own at the end of the day of purchase. So even though the house will be a buy-to-let, it will be your sole property and so this higher rate of SDLT will not apply.

What will trigger a higher rate of SDLT (since 1 April 2021) is the fact that you are not UK residents. Buyers are non-UK resident in relation to the transaction if they are not present in the UK for at least six months (183 days) during the 12 months before the purchase of a property. If you are buying a residential property in England or Northern Ireland (but not Scotland and Wales), you’ll usually pay a 2% SDLT surcharge. This is on top of the £12,500, which will be due on any amount over the new £250,000 0% SDLT threshold. For first-time buyers (which you’re not), the new threshold is £425,000, provided the property doesn’t cost more than £625,000.

There has also been a change in Wales, where the land transaction tax threshold has gone up from £180,000 to £225,000 (since 10 October 2022). In Scotland there has been a change in the “land and buildings transaction tax additional dwelling supplement”, which since 25 January 2019 is no longer 3% but 4%.

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