Guide to stamp duty for buy-to-let landlords
Stamp duty for a limited company
Now, let’s look at the stamp duty rules for company owned and corporate owned residential and non-residential properties.
Residential property
Limited companies will always pay the 3% stamp duty surcharge on top of the standard stamp duty rate on any residential property purchased above £40,000. This is the case whether it's the first property purchased by the company or not.
Those based outside the UK who are purchasing property via a limited company will pay a 2% additional SDLT surcharge rate for non-residents.
| Property price | Standard Stamp Duty rate | Buy-to-let Stamp Duty rate |
|---|---|---|
| £0-£40,000 | 0% | 0% |
| £0 to £250,000 | 0% | 3% |
| £250,001 to £925,000 | 5% | 8% |
| £925,001 to £1.5m | 10% | 13% |
| £1.5m+ | 12% | 15% |
Commercial and mixed-use property (non-residential)
For all non-residential or mixed-use properties purchased by the company, the regular freehold and leasehold non-residential rates apply. There is no 3% surcharge on non-residential properties for companies.
Do I pay stamp duty when incorporating my properties into a company?
Yes, incorporating a property portfolio is a legal transfer of ownership from an individual to a separate entity (the limited company) and this will trigger stamp duty and capital gains tax charges.
Stamp duty is paid on the market value at the date of transfer and applies regardless of whether cash is paid or shares are given for the properties or the properties are gifted to the limited company.
Partnership stamp duty relief (Schedule 15)
If you’re running your property business and are married or in a civil partnership, a registered partnership or an LLP, you could be eligible for S15 land and buildings SDLT relief on incorporation of the property.
Why do I have to pay a surcharge on buy-to-let properties?
In 2015, the Chancellor announced a 3% additional rate of Stamp Duty on purchases of additional properties, which was implemented in April 2016. This was designed to target purchasers of second homes and property investors in an attempt to slow the growth of the buy-to-let market. The 3% automatically applies to any limited company purchase, as above.
Corporate owned:
Certain corporate bodies purchasing residential properties over £500k are charged a flat rate of 15% SDLT. This applies to companies, partnerships and investment schemes. This is quite a tricky area of stamp duty land tax - we recommend gaining professional advice on your specific circumstances.
For example, if a 5 bed property was purchased by a company for one of the directors to live in, the company would have to pay 15% SDLT (as well as Annual Tax on Enveloped Dwellings - ATED) charges.
However, if the same 5 bed property was purchased by the company to house employees, the 15% flat rate would not apply, but the 3% surcharge would on the usual residential rates.
Need advice about SDLT?
Everything you need to manage your limited company's tax
Whenever you’re ready, here are 4 ways we can help you start and manage your buy-to-let limited company taxes:
Tax Advice. Talk through your options and increase your confidence by booking a tax consultation with our Chartered Property Tax Advisors.
Company Start Up. For a smooth start and to avoid costly mistakes, our expert team can incorporate your limited company, for less than you think.
Accounting Tax App. Keep on top of your finances in minutes, and prepare and directly submit your accounts and tax returns, with our easy-to-use property accounting app, designed specifically for landlords.
Advisory Service. As your portfolio expands, the complexity of your financial needs grows too. Provestor’s Advisory Service is the next step for investors seeking a deeper level of support and tax expertise.
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