MARKET UPDATE
A Guide to Property Tax Laws in the UK Non-Residents/Foreigners Investors
May 1 , 2025 • Author: Elliot Rowe
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Everything you need to know about non-resident tax on UK property
The RPA Group is not a professional tax advisory service and we recommend that you seek advice from reputed tax advisors concerning any tax implications you may be liable for when buying a UK property. This article is intended as a general guide and rates may have changed since publication. We are, to the best of our knowledge, aware that is up to date as of April 2025.
The UK property market has forever been a popular investment choice for non-residents and foreign nationals but navigating the tax implications of owning property in the UK can be complex. This article outlines the key UK property taxes for foreigners and non residents who own property in the UK, including Stamp Duty Land Tax (SDLT), Income Tax, Capital Gains Tax (CGT), and Inheritance Tax (IHT). Discover everything you need to know about non resident tax on UK property. As ever, if you’re buying a property in the UK you should consult a specialist tax advisor for the most up to date advice.
1
Stamp Duty Land Tax (SDLT)
Stamp Duty Land Tax (SDLT) is a tax paid when purchasing property in England and Northern Ireland. Scotland and Wales have their own equivalents: Land and Buildings Transaction Tax (LBTT) and Land Transaction Tax (LTT).
SDLT Rates for Non-Residents & Companies
As of April 2025, if the property you are buying is a buy-to-let (i.e. not your main residence) and you are a non-UK resident you will pay all three of the following SDLT components:
Standard SDLT rates based on property price.
5% Higher Rate for Additional Dwellings (HRAD) which applies to second homes and buy-to-let properties.
2% Non-Resident Surcharge which applies if you fail the 183-day UK residency test.
Therefore, non-residents purchasing a residential property in England that is not their main residence can expect to pay an additional total of 7% on Standard SDLT rates, combined of the +5% HRAD and 2% non-resident surcharge.
Stamp Duty Land Tax (SDLT) Rates
Current SDLT rates for residential properties in England and Northern Ireland
| Property Price Band | Standard Rate | Additional Property Surcharge | Non-Resident Surcharge | Total SDLT Rate |
|---|---|---|---|---|
| Up to £125,000 | 0% | 5% | 2% | 7% |
| £125,001 to £250,000 | 2% | 5% | 2% | 9% |
| £250,001 to £925,000 | 5% | 5% | 2% | 12% |
| £925,001 to £1.5 million | 10% | 5% | 2% | 17% |
| Above £1.5 million | 12% | 5% | 2% | 19% |
Example SDLT Calculation Breakdown - £500,000 Property
For a non-UK resident purchasing a £500,000 buy-to-let property.
Please note that these rates are subject to change, and it's advisable to consult the official HMRC guidance or a tax professional for the most current information.
There are also special rates and different SDLT rules and rate calculations for:
Corporate bodies
Shared ownership properties
People buying 6 or more residential properties in one transaction
Multiple purchases or transfers between the same buyer and seller (linked purchases)
Companies and trusts buying residential property
Please see HMRC website for further information on how to apply for an exemption.
2
Income Tax on Rental Income
Non-residents earning rental income from UK properties must pay Income Tax. The tax is calculated on net rental income (after allowable expenses such as maintenance and mortgage interest relief).
Tax Rates for 2025/26
Non-residents can apply for the Non-Resident Landlord Scheme (NRLS) to receive rental income without automatic tax deductions by tenants or letting agents, though tax must still be paid via a UK self-assessment tax return. Your lettings and management agent should advise and notify you of this and supply you with the necessary code.
3
Capital Gains Tax (CGT) on Property Sales
Capital Gains Tax (CGT) applies when non-residents sell a UK property. The tax free allowance is £3,000.
CGT Rates for Non-Residents
Since April 6, 2015, non-residents have been subject to CGT on gains made from selling UK residential property. From April 6, 2019, this was extended to include all UK property and land, including commercial property.
CGT is only payable on the gain made since April 2015 (for residential property) or April 2019 (for other properties). Sellers must report and pay any CGT due within 60 days of completing the sale.
4
Inheritance Tax (IHT) on UK Property
UK property owned by non-residents is subject to Inheritance Tax (IHT) upon death. The standard IHT rate is 40% on estates valued over the tax-free threshold of £325,000. As of 6th April 2026, reforms will limit agricultural property relief to £1million and include pension posts in taxable estates
IHT Planning Considerations
Assets can be passed tax-free to a spouse or civil partner.
Lifetime gifts may be exempt if the donor survives seven years.
Holding property through a corporate structure may have IHT implications.
5
Annual Tax on Enveloped Dwellings (ATED)
Non-residents owning UK residential property through a company may be subject to the Annual Tax on Enveloped Dwellings (ATED) if the property is valued over £500,000. The tax bands for 2023/24 are:
Tax Bands for 2023/24
6
UK Tax Reliefs and Exemptions for Non-Residents
Personal Allowance: Available to residents of countries with UK tax treaties.
Private Residence Relief: Reduces CGT liability if the property was the owner's main home.
Double Taxation Agreements (DTAs): May reduce tax liabilities for residents of treaty countries.
7
How to File UK Tax Returns as a Non-Resident
Non-residents must register with HM Revenue & Customs (HMRC) and file a Self-Assessment tax return for income tax and CGT purposes. Key deadlines include:
January 31 (online filing deadline for income tax and CGT).
60 days post-sale for CGT reporting.
Your lettings agent may provide annual tax filing as an additional service so it’s worth asking them for assistance with the reporting of rental income to ensure you are compliant.
conclusion
Non-residents investing in UK property must be aware of various tax obligations, including SDLT, income tax, CGT, IHT, and ATED. Seeking professional tax advice can help optimize tax liabilities and ensure compliance with HMRC regulations. We advise all our clients to consult a specialist tax advisor when purchasing UK property as personal circumstances change and you may qualify for an exemption. This article is merely a guide of the relevant taxes you may encounter.
Please contact us today and we can refer you to one of our trusted partners to ensure you receive the best advice for your UK investment property purchase.
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elliot rowe
With 16 years of experience in the UK Real Estate Industry working in the UK and the Middle East, Elliot has been advising clients on leading portfolios to achieve their goals and personal targets and has built a network of high-profile investors and property professionals globally.
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