SDLT - considerations for companies acquiring residential property

Stamp Duty Land Tax (SDLT) is a tax payable to HMRC on the actual or deemed consideration for property in England. In this article, we are looking specifically at some common situations involving companies acquiring residential property in England. Different rules may apply to property in Wales (where Land Transaction Tax is charged instead).

A company may acquire property for a variety of different reasons. It may be that inheritance tax planning is the main reason for this or due to certain other tax advantages over owning property as an individual, such as lower corporation tax as opposed to higher-rate income tax. However, consideration should be given to the following:

  • if the consideration/value of the property is over £500,000, a company will be automatically subject to a flat rate of SDLT at 15%. There are some reliefs available but these are narrow.

  • A company will also be required in the above scenario to pay an ATED (Annual Tax on Enveloped Dwellings). This is a set rate of tax ranging from (currently in 2024/25) £4,400 to £287,500 depending on the value-banding of the property.

  • if transferring property from an individual to a company where the individual is ‘connected’ with the company, the consideration on which SDLT will be assessed is the market value of the property rather than the consideration stated to be payable (unless the consideration is higher than the market value). For example, if you wish to transfer a property you own personally to a company which you are connected with, and state the consideration payable is £1, but the market value is actually £300,000, you will pay SDLT on £300,000.

  • an individual is ‘connected’ with the company if they have control of the company (commonly a director), or are a relative of that person, or a spouse of that person (s.1122 Corporation Tax Act 2010).

This article is not tax or legal advice and specific advice should be sought to assist with structuring an acquisition in the right way; especially from a qualified tax specialist. Should you require advice, please contact a member of the property team on 0333 577 2250 or property@leedsday.co.uk

Previous
Previous

Professionally drafted Wills – is it worth it?

Next
Next

The Importance of Obtaining a Copy of the Will for a Property and Financial Affairs Deputy