What tax does a foreign buyer pay on UK property?

Exactly how much Stamp Duty you pay

Stamp Duty Land Tax is progressive, band by band. On top of the standard scale sit 5% for this being an additional property and a further 2% for not being UK resident, and both surcharges apply to every band, including the one that pays 0% on the standard scale.

An example, because band percentages confuse. On a purchase of £255,000: the first £125,000 at 7% is £8,750; the next £125,000 at 9% is £11,250; the remaining £5,000 at 12% is £600. Total: £20,600, a little over 8% of the price.

Neither surcharge is inevitable

Almost every Spanish-language write-up presents the cumulative 7% as if it were the fixed price of being foreign. It is not. Each surcharge has its own condition, and it pays to know which before doing the arithmetic.

• The 2% for non-residence can be reclaimed. If the buyer becomes UK resident for the purposes of this tax —183 days or more in any continuous 365-day period starting up to 12 months before the transaction and ending up to 12 months after— they can apply to HMRC for a refund. The window to claim is two years from the transaction date, and it is claimed by amending the return already filed.
• The 5% depends on owning another home, not on being foreign. The test looks at homes already owned in any country, not just in the United Kingdom. That is what makes almost every Latin American buyer pay it; it is also why it is not automatic.
• If what you are buying is not residential, neither applies. You enter through the non-residential scale, which is a different one and lower. It covers commercial property, mixed-use assets and the purchase of six or more dwellings in a single transaction. It is in the commercial property guide.

None of the three is a recommendation: they are the conditions the law sets. Which one applies to a particular buyer is settled with their adviser, and before signing, because afterwards the room closes.

How rental income is taxed

A non-resident landlord pays UK tax on the rental profit. HMRC collects it through the Non-Resident Landlord Scheme: the letting agent —or the tenant directly, if there is no agent— must withhold 20% of the rent, unless HMRC authorises receiving it gross through form NRL1.

• With NRL1 approval, you receive the rent in full and settle later on the annual return.
• Without approval, 20% is withheld at source and recovered, if due, on filing.
• From April 2027, property income tax rates rise by two points in every band: 22%, 42% and 47%. This was announced in the Autumn Budget 2025.

That last point is the one worth building into any five- or ten-year return calculation. That the change was announced eighteen months ahead is precisely the advantage of a framework legislated in public: you can plan around it.

And on sale

Non-residents are subject to Capital Gains Tax on the gain made on the sale of UK property. The transaction must be reported to HMRC within the set deadline after completion, even where no tax is due. It is a formal obligation that is frequently missed and that triggers avoidable penalties.

What happens if I die as a non-resident

UK residential property sits within the scope of UK inheritance tax even where the owner is not resident. The general nil-rate band is £325,000 and the rate above it is 40%, but that 40% is not automatic: the nil-rate band, the spouse exemption, the deduction of debt and prior planning all come into play.

One very widespread idea is worth dismantling here: putting a British flat into a family company does not, by itself, take it out of inheritance tax. That worked until 2017. Since 6 April of that year, Schedule A1 of the Inheritance Tax Act 1984 provides that shares in a close company are not excluded property to the extent their value derives from UK residential property.

If someone offers you a corporate structure as an automatic way of avoiding inheritance tax on a British flat, that claim has been almost a decade out of date.

That said, the word that matters is close, and the analysis changes depending on how the company is composed, who participates in it, what kind of asset it holds and where it is incorporated. The rule also targets residential property, and since 6 April 2026 agricultural property too, following the extension announced in the Autumn Budget 2025: commercial property is treated differently, and we cover it in the commercial property guide. And since 6 April 2025 UK inheritance tax has moved to a residence-based system, though UK-situs assets always remain within scope. The practical conclusion is not that structure is useless, but that the right one depends on the case and is not decided by a general rule. We go into this in the structures guide.

And what do I declare at home

It depends on your jurisdiction of tax residence. In some Latin American jurisdictions holding property abroad must be declared, counts towards wealth tax, and moving the funds out has to be channelled and reported to the central bank. Double taxation treaties with the United Kingdom exist in several countries in the region, but not all, and their scope varies. This is settled with a tax adviser in your own country; we coordinate it, we do not replace it.

Related questions

Sources

General information drawn from the official sources listed at the end. It is not tax, legal or financial advice. Rates and thresholds change; check against the official source before deciding. Acacias Capital Ltd is not authorised or regulated by the FCA.