For a limited company entering property ownership in England or Wales, the Stamp Duty Land Tax, also known as SDLT, is important. Limited Company buyers are subjected to various rules, varied rates, and different surcharges than private individuals. This fully comprehensive guide offers everything from rates and reliefs to tax-saving strategies with SDLT for companies. We will explore these in detail below.
What is Stamp Duty Land Tax (SDLT)?
in England and Wales. It applies not just to individuals but also to corporate buyers, including companies, partnerships with corporate partners, and collective investment schemes. So, whether you’re a first-time buyer looking for your dream home or a business looking to invest in real estate, SDLT is something you’ll need to consider as part of the property transaction process. It is an important aspect of the buying journey, making it essential to be aware of the implications it may have on your finances.
Did You Know?
In Scotland, a similar tax applies called the Land and Buildings Transaction Tax (LBTT). This was brought into effect from April 1 2015. However, this tax is designed in such a way that the charge is more proportionate to the actual price of the property. Similarly, in Wales, companies pay Land Transaction Tax (LTT).
How will Stamp Duty Land Tax be calculated if I transfer my property to my limited company for no monetary value?
When transferring a property to a Limited Company, you are free to transfer it for whatever price you wish; even as low as £1. However, keep in mind that Stamp Duty Land Tax (SDLT) will usually be calculated based on the full market value of the property, not the price it is purchased for. We recommend you obtain a valuation from a RICS chartered surveyor at the time of completion. Read more about buying to let via a limited company in this article.
Use Our SDLT Calculator for Companies
Estimate your SDLT liability quickly and easily with our SDLT Calculator for Companies.
Features:
- Enter the property price.
- Receive an SDLT breakdown instantly.
Knowing your SDLT costs upfront can help you budget smarter and avoid surprises.
SDLT Rates for Companies up until 31 March 2025
Residential Properties
Corporate buyers pay higher SDLT rates due to a mandatory 3% surcharge applied on top of standard rates:
Property Price | SDLT Rate (Including 3% Surcharge) |
£0 – £250,000 | 5% |
£250,001 – £925,000 | 10% |
£925,001 – £1.5 million | 15% |
Over £1.5 million | 17% |
Example: For a company buying a residential property worth £600,000:
- £250,000 at 5% = £12,500
- £350,000 at 10% = £35,000
Total SDLT owed: £47,500.
Non-Residential or Mixed-Use Properties
For non-residential or mixed-use properties, SDLT rates are significantly lower, with no 3% surcharge:
Property Price | SDLT Rate |
£0 – £150,000 | 0% |
£150,001 – £250,000 | 2% |
Over £250,000 | 5% |
What Are Mixed-Use Properties?
These are properties with both residential and commercial elements, such as buildings with retail units on the ground floor and flats above. Mixed-use properties qualify for non-residential SDLT rates, avoiding the 3% surcharge.
High-Value Residential Properties
Corporate bodies buying residential properties worth over £500,000 may face a 17% SDLT rate, unless they qualify for specific exemptions.
Exemptions from the 17% Rate:
- The property is part of a rental business.
- It is purchased for property development or trading.
- It is used as accommodation for employees.
Additional SDLT Surcharges
- 5% Surcharge for Additional Properties
Corporate buyers purchasing additional residential properties pay an extra 5% surcharge, increasing overall SDLT liability. - 2% Surcharge for Non-UK Resident Companies
Non-UK resident companies are subject to a 2% surcharge on all residential property purchases in England and Northern Ireland.
SDLT Reliefs and Exemptions
Corporate buyers may benefit from specific SDLT reliefs to reduce their tax liability:
1. Relief for Property Developers and Traders
Companies engaged in property rental, development, or trading may qualify for relief from the 17% SDLT rate, provided the property is part of their business operations.
2. Relief for Charities and Public Use
Properties bought for charitable purposes or for public use, such as under the ‘Homes for Ukraine’ sponsorship scheme, may be eligible for SDLT exemptions.
Annual Tax on Enveloped Dwellings (ATED)
Corporate owners of residential properties valued over £500,000 may also face the Annual Tax on Enveloped Dwellings (ATED). This is separate from SDLT and is charged annually based on property value.
Property Value | ATED Charge (Annual) |
£500,000 – £1 million | £4,000 |
£1 million – £2 million | £8,000 |
Over £2 million | £20,000 |
FAQs About SDLT for Companies
Can Companies Avoid the 3% Surcharge?
No, the 3% surcharge applies to all residential property purchases by companies. However, non-residential and mixed-use properties are exempt.
Do Non-UK Companies Pay More SDLT?
Yes, non-UK resident companies face an additional 2% surcharge on residential property purchases.
Are There SDLT Reliefs for High-Value Properties?
Yes, companies may be exempt from the 17% SDLT rate if the property is part of a trade, rental, or development business.
What is the SDLT Deadline for Companies?
Companies must pay SDLT within 14 days of completing the purchase. Late payments can result in penalties and interest charges from HMRC.
How Does SDLT Work for Leasehold Properties?
When companies purchase leasehold properties, SDLT is calculated based on the premium (price) paid for the lease and the net present value (NPV) of rent due over the lease term. Higher rates apply for longer leases or higher premiums.
Are Stamp Duty Costs Tax-Deductible for Companies?
No, SDLT is considered a capital cost and is not tax-deductible. However, it can be added to the cost base of the property for capital gains tax purposes if the property is sold in the future.
What Happens If a Company Buys Property for Directors or Shareholders?
If a residential property is purchased for personal use by directors or shareholders, the 17% SDLT rate applies, and the property may also be subject to the Annual Tax on Enveloped Dwellings (ATED).
Does SDLT Apply to Transfers of Property Between Group Companies?
Transfers of property between group companies may be exempt from SDLT under the Group Relief provisions, provided specific conditions are met, such as the transfer being for business purposes.
How Does SDLT Apply to Joint Purchases Involving Companies?
If a company is part of a joint purchase with an individual, the higher SDLT rates for companies apply to the entire transaction, even if the individual would otherwise qualify for lower rates.
Are There SDLT Penalties for Incorrect Filings?
Yes, submitting incorrect SDLT returns can result in penalties from HMRC. Companies should ensure accurate filings and consider consulting tax professionals to avoid errors.
Why SDLT Matters for Companies
Stamp Duty Land Tax represents a significant cost for corporate buyers, affecting profitability and investment decisions.
Key Considerations:
- Planning Costs: Understand SDLT before making purchases to budget effectively.
- Compliance: Avoid penalties by ensuring SDLT filings are accurate and timely.
- Investment Strategy: Choose property types (e.g., mixed-use) that minimise tax liability.