Most people aren’t aware of the 15% which can apply to corporate property purchases over £500k and expect to pay the rates below (these are the rates with the extra 3%)
|Property or lease premium or transfer value||SDLT rate|
|Up to £125,000||3%|
|The next £125,000 (the portion from £125,001 to £250,000)||5%|
|The next £675,000 (the portion from £250,001 to £925,000)||8%|
|The next £575,000 (the portion from £925,001 to £1.5 million)||13%|
|The remaining amount (the portion above £1.5 million)||15%|
Stamp Duty Land Tax (SDLT) is charged at 15% on residential properties costing more than £500,000 bought by certain corporate bodies or ‘non-natural persons’. These include:
- partnerships including companies
- collective investment schemes
These bodies may also need to pay Annual Tax on Enveloped Dwellings.
Relief from the 15% higher rate charge
The 15% rate does not apply to property bought by a company that is acting as a trustee of a settlement or bought by a company to be used for:
- a property rental business
- property developers and traders
FA03/S55/SCH4A: property rental businesses FA03/SCH4A/PARA5
Where the acquisition of a chargeable interest is exclusively for the purpose of exploitation as a source of rents or other receipts in the course of a qualifying property rental business, the 15% higher rate charge will not apply to the transaction. Instead, SDLT will be charged at the higher rates (the ones with the extra 3% in the table above) – see SDLTM09835 for more information on companies and the higher rates.
To qualify as a qualifying property rental business, the business must meet two conditions:-
- it must be a property rental business as defined in Chapter 2 of Part 4, CTA 2009 (excluding the condition that the profits are chargeable to corporation tax – see PIM1020 onwards for more information), and
- it must be carried on a commercial basis and with a view to a profit.
This relief may be withdrawn in certain circumstances:-
So thankfully most companies won’t have to pay 15% but this has been a source of confusion for some clients.