When a company purchases residential property, the SDLT position depends on the purchase price and the nature of the company’s property activities. For purchases up to GBP500,000, the company pays the standard residential rates plus the 3% higher rates surcharge. For purchases above GBP500,000, the starting position is a 15% flat rate (the ATED-related SDLT rate), unless a relief is available and properly claimed.
The 15% rate is not a penalty for using a company — it is the default position for non-natural persons acquiring high-value residential property. Reliefs exist because the legislation recognises that companies legitimately acquire residential property for commercial purposes: property rental businesses, developers, and property traders. But the relief must be actively claimed on the SDLT return with supporting evidence. It is not applied automatically.
Property rental business relief: Available where the company is acquiring the property for the purpose of a property rental business. The company must demonstrate a genuine rental business intention, not merely an intention to hold the property.
Property development relief: Available where the company acquires the property for the purpose of developing and reselling it. This applies to developers who buy, refurbish, and sell.
Property trading relief: Available where the company acquires the property in the course of a property trading business. The acquisition must be for the purpose of the trade, not as an investment.
Each relief has specific conditions. The relief claimed must match the actual intended use. Claiming property rental relief on a property the company intends to develop and sell would be incorrect. We advise on which relief is appropriate and ensure the claim is properly documented.
Companies holding UK residential property valued at more than GBP500,000 must file an Annual Tax on Enveloped Dwellings (ATED) return each year, even where a relief applies. This is a common compliance requirement that many company landlords overlook. Missing the annual ATED return attracts penalties, regardless of whether any tax is actually due.
We advise on ATED compliance at the point of acquisition and handle the annual filings on an ongoing basis, so the obligation is not missed.
Schedule a free 30-minute consultation to discuss your personal tax compliance.
