If you are buying UK residential property and you fail the SDLT-specific residence test, you already pay a 2% surcharge on top of every band, and Labour's 2024 manifesto wanted to push that to 3%. On a £1 million home that one-point move is another £10,000, and on a £2 million prime London purchase it is £20,000. As at 26 May 2026 the increase has not happened: the rate is still 2% under FA 2003 Schedule 9A, the rate FA 2021 s.86 and Schedule 16 introduced from 1 April 2021. The manifesto pitched the rise as an anti-overseas-investor housing-affordability measure, sitting alongside Build-to-Rent regulation, planning reform, and the Renters' Reform legislation, but it was the surcharge that carried the tax weight. What matters for a live deal is where the rate stands today, how it stacks with the 5% additional dwellings surcharge, and what happens to a transaction caught mid-flight if the rate ever moves.

The current statutory position as at 26 May 2026

The non-resident SDLT surcharge under FA 2003 Schedule 9A remains at 2%, the rate FA 2021 s.86 and Schedule 16 introduced with effect from 1 April 2021. That 2% is added to each band of the rates that would otherwise apply, with the computation set out at FA 2003 s.55C. It bites on residential transactions where the buyer fails the SDLT-specific 183-day residence test under Schedule 9A paragraph 4. The verbatim Schedule 9A text sits at legislation.gov.uk/ukpga/2003/14/schedule/9A (verified 2026-05-26).

The 1-percentage-point increase from 2% to 3% has not been legislated. The Autumn Budget 2024 (delivered by the Labour Chancellor in October 2024 after the General Election) and the Spring Statement 2025 both came and went without implementing the manifesto commitment on the non-resident surcharge. The Finance Act in force is FA 2025 c.8, which carries the 5% additional dwellings surcharge rate under s.51 (in force from 31 October 2024) but leaves the Schedule 9A rate untouched. Before you rely on any rate for a live deal, check it against gov.uk and against any Finance Bill 2025-26 or subsequent Finance Act; this is the policy state as at 26 May 2026, not a guarantee for the day you complete.

The Labour 2024 manifesto commitment

The 2024 Labour manifesto committed to lifting the non-resident surcharge by 1 percentage point, from 2% to 3%, and pitched it as a flagship measure within a broader housing-affordability package. The stated logic was that overseas-cash buyers compete with UK-resident buyers in higher-value markets (London prime in particular), pushing prices up and squeezing affordability for UK households, and that a higher surcharge would dampen that overseas-cash demand at the margin.

The manifesto set no commencement date. It was a policy direction, not a legislative timetable. SDLT surcharge rates change through a Finance Act, with the commencement date set in the Act itself, so until a Bill appears there is nothing to grandfather against.

Critique and the policy debate

The argument over the surcharge is really about whether it works. Three lines of critique recur in market commentary:

  • Market-share effect: non-resident buyers are a small share of the wider UK housing market by volume; the surcharge has limited supply-side effect on UK-resident affordability because most UK transactions do not involve non-resident buyers in the first place.
  • Prime-market sensitivity: the surcharge is most binding in prime central London and similar prime regional markets, where the overseas-buyer share is highest. These markets are also least sensitive to a 1 or 2 percentage-point rate change because buyers are typically cash-rich and price-inelastic at the margin.
  • Investor-flow deterrent: the surcharge may deter overseas-investor flows into UK housing-development pipelines, where the investor capital can support new supply. A surcharge increase tightens the deterrent.

Supporters of a higher rate make the opposite case: the cumulative effect of a sustained policy direction (each rise nudges the marginal cost of overseas-cash purchases up a little more), the political signal of a tax aimed squarely at overseas investors, and the revenue it raises at low administrative cost. The point for your planning is not who wins the argument but the figures at both rates, which is what the worked examples below set against each other.

Stacking with the 5% additional dwellings surcharge

The Schedule 9A non-resident surcharge stacks additively on top of the 5% additional dwellings surcharge under FA 2003 Schedule 4ZA. The 5% rate is the operative additional dwellings surcharge rate from 31 October 2024, introduced by FA 2025 s.51 (replacing the previous 3% rate). Both surcharges apply to residential transactions and operate via the band-additive computation under FA 2003 s.55B (Schedule 4ZA) and FA 2003 s.55C (Schedule 9A).

If you already hold a dwelling anywhere in the world, both surcharges apply on your UK purchase. The combined load is 5% (Schedule 4ZA) plus 2% (Schedule 9A), so 7% on top of the standard residential Table A rates. At a hypothetical 3% Schedule 9A rate it would be 8%. On the top residential band (consideration above £1.5 million), the combined effective rate at 7% surcharge is 19% (12% standard plus 7% surcharge); at 8% it would be 20%.

The worldwide-property mechanics that trigger the Schedule 4ZA surcharge are set out in our how owning property abroad leads to higher SDLT rates page, which maps the three statutory routes (Schedule 4ZA worldwide reach, Schedule 9A non-resident surcharge, Schedule 6ZA FTB-relief disapplication) through which overseas property ownership raises a UK buyer's SDLT bill.

Worked examples at both rates

Here is the cash difference at three price points, assuming you buy alone and own no other property, so the Schedule 9A surcharge applies and Schedule 4ZA does not:

£500,000 purchase. Standard residential SDLT under Table A: 0% on £125,000 plus 2% on £125,000 (£2,500) plus 5% on £250,000 (£12,500) equals £15,000. With 2% non-resident surcharge added band-by-band under FA 2003 s.55C: 2% on £125,000 (£2,500) plus 4% on £125,000 (£5,000) plus 7% on £250,000 (£17,500) equals £25,000. Additional cost of non-residence: £10,000. At a hypothetical 3% rate: 3% on £125,000 (£3,750) plus 5% on £125,000 (£6,250) plus 8% on £250,000 (£20,000) equals £30,000. Differential between 2% and 3% rates: £5,000.

£1,000,000 purchase. Standard residential SDLT: 0% on £125,000 plus 2% on £125,000 (£2,500) plus 5% on £675,000 (£33,750) plus 10% on £75,000 (£7,500) equals £43,750. With 2% non-resident surcharge: £63,750. Differential: £10,000 added by the surcharge. At a hypothetical 3% rate: £73,750. Differential between 2% and 3% rates: £10,000.

£2,000,000 purchase. Standard residential SDLT: 0% on £125,000 plus 2% on £125,000 (£2,500) plus 5% on £675,000 (£33,750) plus 10% on £575,000 (£57,500) plus 12% on £500,000 (£60,000) equals £153,750. With 2% non-resident surcharge: £193,750. At a hypothetical 3% rate: £213,750. Differential between 2% and 3% rates: £20,000.

The differential between the 2% and 3% rates is consistently 1% of the purchase price (the surcharge is added linearly across all bands). At the £2 million transaction band typical of upper-prime London purchases, the 1-percentage-point increase represents £20,000 of additional SDLT; at the £5 million transaction band (top of the prime market), £50,000.

Combined non-resident plus additional dwellings examples

If you are non-resident and also sit in an additional-dwellings position (worldwide-property ownership over £40,000 under Schedule 4ZA, or spouse-aggregation triggering the surcharge), both surcharges apply.

£500,000 purchase, non-resident plus additional dwellings. Standard residential SDLT £15,000. Add 5% Schedule 4ZA on each band: 5% on £125,000 plus 7% on £125,000 plus 10% on £250,000 equals £6,250 + £8,750 + £25,000 = £40,000. Add 2% Schedule 9A on each band on top: 7% on £125,000 plus 9% on £125,000 plus 12% on £250,000 equals £8,750 + £11,250 + £30,000 = £50,000. At a hypothetical 3% non-resident rate: 8% on £125,000 plus 10% on £125,000 plus 13% on £250,000 equals £10,000 + £12,500 + £32,500 = £55,000.

£1,000,000 purchase, non-resident plus additional dwellings. Standard residential SDLT £43,750. With 5% Schedule 4ZA: £93,750. With 5% + 2% surcharges: £113,750. At hypothetical 3% non-resident rate: £123,750.

This is the heaviest SDLT load UK residential property carries. A non-resident buy-to-let buyer at £1 million pays £113,750 at the current rates, an effective 11.4%, rising to £123,750 (12.4% effective) at the hypothetical 3% rate. On a high-end non-resident BTL portfolio that surcharge load is a serious slice of your entry cost, not a rounding error.

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The SDLT-specific 183-day residence test

Paragraph 4 of Schedule 9A is the SDLT-specific test for whether you are non-resident for the surcharge, and it is not the same test as the Statutory Residence Test under FA 2013 Schedule 45 you use for income tax and capital gains tax. It asks whether the buyer was present in the UK for at least 183 days during any continuous period of 365 days that begins not earlier than 364 days before the effective date of the transaction and ends not later than 365 days after the effective date.

Three features are worth holding on to. The 365-day window is flexible: it can start up to a year before the transaction and end up to a year after, so you do not have to be UK-resident on the effective date itself, only across some qualifying window that spans it. The 183-day threshold is fixed: fewer than 183 days in every possible window and you are non-resident. And the year after completion opens the refund route, because if you fail at completion but then satisfy the test within 12 months after the transaction (you become UK-resident under the SDLT-specific test in that following year), you can reclaim the 2% surcharge you paid.

The gap between this test and the FA 2013 SRT trips up cross-border buyers constantly. You can be UK-resident under the SRT for income tax and still non-resident under the SDLT-specific test, especially in your year of arrival or in a year with heavy overseas absence. The two tests answer different questions and can land on opposite answers for the same person.

Commencement-date discipline for transactions in flight

Past SDLT rate changes have typically followed the pattern that contracts exchanged before the announcement date of the rate change but completing after may be at the old rate under transitional or grandfathering rules; contracts exchanged after the announcement are at the new rate. The exact transitional provisions depend on the wording of the Finance Act that legislates the change. The 5% Schedule 4ZA rate (introduced by FA 2025 s.51 with effect from 31 October 2024) operated on this pattern: contracts exchanged before 31 October 2024 but completing after that date were at the 3% rate; contracts exchanged after 31 October 2024 were at the 5% rate.

If a future Finance Bill legislates the Labour 2% to 3% Schedule 9A increase, the commencement date and transitional provisions would be set out in the Act itself. If you have a transaction in progress when any announcement lands, take advice immediately on the exchange-date discipline and what it means for your completion timing, because the difference between exchanging the day before and the day after an announcement can be the whole increase.

Practical guidance for non-resident buyers planning a UK purchase

If you are buying a UK home as a non-resident in the 2025-26 policy window, five steps will keep you in control:

  1. Confirm your residence status under the SDLT-specific 183-day test. Do not lean on the FA 2013 Statutory Residence Test. The Schedule 9A paragraph 4 test is different and can give a different answer. Document your UK presence across the relevant 365-day windows.
  2. Model the SDLT at both rates. Run it at the current 2% Schedule 9A rate (the position as at 26 May 2026) and at a hypothetical 3% rate. The 1-percentage-point gap is £10,000 per million pounds of purchase price, which matters for both your planning and your affordability headroom.
  3. Check the worldwide-property triangulation. See whether the additional dwellings surcharge under Schedule 4ZA also catches you (worldwide-property ownership over £40,000; spouse-aggregation under paragraph 9). Where both surcharges apply the stacking is heavy; our how owning property abroad leads to higher SDLT rates page walks the three routes.
  4. Test your FTB-relief eligibility. First-time buyer relief under Schedule 6ZA is not residence-conditional, so if you have never owned property anywhere in the world you can claim it, with the Schedule 9A surcharge still landing on top.
  5. Get UK conveyancing and tax advice in early. Your SDLT return is filed at completion and the surcharges go on the SDLT1; getting the figure right at filing is far easier than amending later. Tell your conveyancer about all of your worldwide property and any spouse or civil partner property.

Statutory references

  • FA 2003 Schedule 9A "Higher rates for non-resident transactions" (inserted by FA 2021 s.86 and Schedule 16; in force from 1 April 2021; 2% rate operative as at 26 May 2026): legislation.gov.uk/ukpga/2003/14/schedule/9A
  • FA 2003 Schedule 9A paragraph 4 (SDLT-specific 183-day residence test for individuals; distinct from FA 2013 SRT).
  • FA 2003 Schedule 9A paragraph 5 (residence test for company buyers; covers non-UK-resident companies and UK-resident companies close-controlled by non-UK-resident participators).
  • FA 2003 s.55C (non-resident higher-rate computation; added by FA 2021 Schedule 16; band-additive): legislation.gov.uk/ukpga/2003/14/section/55C
  • FA 2003 s.55 (residential rates Table A; post 1 April 2025 reverted bands): legislation.gov.uk/ukpga/2003/14/section/55
  • FA 2003 s.55B (additional dwellings higher-rate computation; band-additive; for the Schedule 4ZA stacking interaction): legislation.gov.uk/ukpga/2003/14/section/55B
  • FA 2003 Schedule 4ZA "Higher rates for additional dwellings" (5% rate from 31 October 2024 per FA 2025 s.51): legislation.gov.uk/ukpga/2003/14/schedule/4ZA
  • FA 2003 Schedule 6ZA "Relief for first-time buyers" (relief not residence-conditional; applies to non-resident buyers meeting the Schedule 6ZA tests): legislation.gov.uk/ukpga/2003/14/schedule/6ZA
  • FA 2021 s.86 + Schedule 16 (introduction of the non-resident surcharge; in force 1 April 2021).
  • FA 2025 c. 8 s.51 (5% additional dwellings surcharge rate from 31 October 2024): legislation.gov.uk/ukpga/2025/8/section/51
  • HMRC SDLT Manual SDLTM09850+ (non-resident surcharge mechanics): gov.uk SDLTM09850
  • Labour Party 2024 General Election manifesto (committed to increase the Schedule 9A non-resident surcharge from 2% to 3% as a housing-affordability measure).