SDLT – reliefs for the purchase of residential properties by a company article banner image

The Stamp Duty Land Tax (SDLT) rate for the purchase of a residential property by a company (or other non-natural persons) for more than £500,000 is an eye watering 15%.

The 15% tax rate was imposed to discourage acquisitions by companies because SDLT can be avoided on subsequent disposals by the sale of the company holding the property itself rather than a disposal of the property itself.

However, the acquisition of high value residential property by companies in the normal course of its business is common and the 15% tax rate can be prohibitive to companies looking to invest in property. There are reliefs from the 15% tax rate which are designed to be available to legitimate company purchasers (as opposed to those simply seeking to avoid SDLT).

Relief from 15% tax rate

One such relief is Property Business Relief (PBR). PBR applies where a residential property is acquired for purposes which include development and letting.

1. Property Development

A property development trade is one that includes buying and developing or redeveloping residential or non-residential property for resale and is run on a commercial basis with a view to profit.

“Development” can mean demolition of an existing dwelling and replacement with several new dwellings (e.g. construction of a block of flats) but also includes refurbishments of substantially the whole of the property (e.g. by fitting new kitchens and bathrooms) and building extensions.

2. Property Letting

Property must be acquired in order to receive an income by way of the receipt of rents. Some types of rent are excluded, including rents from mobile phone masts and wind turbines.

Where the property is acquired and developed prior to letting this should still qualify for property rental business relief provided that it has been acquired exclusively for the receipt of rental income and reasonable steps have been taken for that purpose (e.g. advertising the property to let and undertaking works that are expected to help the property become let).

Where PBR is available the 15% tax rate will not apply and tax will be payable at the normal SDLT slice system for the acquisition of residential property.


There is a clawback mechanism whereby the full 15% tax must be paid if within 3 years of the date of completion of the purchase the property is still held by the buyer and:

1. is no longer being used for the purpose which qualifies for the relief; or

2. is occupied by a “non-qualifying individual” which, for a company, would include a director of that company, that director’s spouse or any person related to either of them (this is not an exhaustive list).

The SDLT law on this subject is much broader than is summarised here.  The SDLT position may be different still where there is an acquisition of more than one dwelling in a single transaction and the changes to the law for the acquisitions of “additional dwellings” announced in the Chancellor’s Autumn 2015 statement may change things further.

It would be sensible for companies to fully evaluate their SDLT liability at the outset of a residential property purchase to budget properly, account correctly to HMRC and avoid any nasty surprises.


Ben Wheeler is a partner and acts for individuals and businesses on the acquisition and disposal of commercial property. If you have any queries, then you can contact Ben on 01872 265100 or email