Stamp Duty (SDLT) for Limited Companies on Buy To Let Property

Simon Misiewicz

Expat & Property Tax Specialist

15th June 2022

Calculate Stamp Duty (SDLT) for limited company owners of business property

Optimize your buy-to-let property investments by exploring the benefits of registering as a UK Limited Company, while navigating the complexities of Stamp Duty Land Tax (SDLT), including the 3% SDLT higher rate. Maximize your returns in the buy-to-let market with strategic planning around Stamp Duty Land Tax (SDLT) obligations, particularly the 3% SDLT higher rate, through the advantages offered by a UK Limited Company structure. Stay informed on tax-efficient strategies for buy-to-let ventures, leveraging the advantages of a UK Limited Company to manage Stamp Duty Land Tax (SDLT) responsibilities, including considerations for the 3% SDLT higher rate.

Use our SDLT calculator to calculate stamp duty for limited companies to check how much you need to pay.

How to calculate Stamp Duty for a limited company is a complex area that UK landlords must navigate with care when buying buy to let property as a business.

Stamp Duty Land Tax (SDLT) is charged 15% on residential houses costing £500,000 and over.

HMRC defines these non-natural persons as companies, partnerships and collective investment schemes.

The 15% SDLT rate does not apply to property bought by a company acting as a settlement trustee.

This SDLT rate is also exempt for limited companies that purchase houses for a property rental business, developers and traders, houses occupied by employees, a housing co-operative, farmhouses, and financial institutions buying property in the course of lending.

These exclusions are subject to specific conditions.

There is a 3% surcharge on residential properties bought by limited companies.

What are the basics of Stamp Duty?

As property accountants serving thousands of UK landlords who purchase buy-to-let properties, we know that SDLT can be an uncertain topic.

SDLT is a tax on the purchase or acquisition of property or land over a certain price in England and Northern Ireland.

Stamp Duty tax works differently if the property or land is in Wales or Scotland.

Where a second property costs more than £40,000, the SDLT rate will be 3% above the standard rates.

Non-resident companies or controlled by non-residents pay a 2% surcharge on all properties over the £40,000 purchase threshold.

If the company is purchasing an additional property, higher rates of SDLT apply.

Landlords will pay an additional 3% above the standard SDLT rates where they already own a property.

Stamp Duty does not apply to purchases under £40,000 or caravans, motorhomes and houseboats.

A limited company will pay the 3% Stamp duty surcharge on any residential property over £40,000.

This applies irrespective of whether or not it is the first property purchased by the company.

All non-residential and mixed-use properties purchased by a limited company pay standard SDLT rates.

There is no 3% Stamp Duty surcharge on non-residential properties for limited companies.

 

Do limited companies pay a surcharge on BTL properties?

The 3% SDLT surcharge was announced in 2015 and implemented in April 2016.

The 3% Stamp Duty automatically applies to any limited company purchasing a property.

This was designed to target purchasers of second homes and property investors.

Will a limited company pay less Stamp Duty?

In April 2020, if you owned a buy-to-let property in your personal capacity, you would no longer be able to offset the mortgage interest payments as an expense against rental income in your self-assessment tax return.

This is not the same for limited companies that hold property.

Mortgage interest payments remain an allowable expense to reduce profits and corporation tax.

However, a limited company will still be liable to pay the 3% SDLT surcharge where a property costs over £40,000.

You will need to pay conveyancing and also potentially mortgage transfer costs.

A limited company pays the same Stamp Duty rate as an individual for non-residential property.

Here are some ways to reduce Stamp Duty as a property developer.

Can a limited company claim back Stamp Duty?

You can only claim back Stamp Duty as a limited company if you are eligible for a refund.

You may be able to claim an SDLT refund if you purchased a new main residence without selling your previous residence but then sold that previous residence within three years.

FAQ: Stamp duty for limited companies

What is stamp duty on business property, and how does it apply to limited companies?

Stamp duty on business property is a tax imposed on certain property transactions, including those involving limited companies. The amount varies, and understanding its implications is crucial for businesses.

Are there specific considerations for limited company stamp duty compared to other business structures?

Yes, limited company stamp duty involves unique considerations. It's essential to navigate the specific regulations and obligations related to stamp duty when a limited company is involved in property transactions.

What strategies can LTDs employ to potentially avoid or minimize stamp duty costs?

LTDs can explore various strategies to manage stamp duty, including SDLT for companies. Effective planning and compliance with regulations can help minimize the impact of stamp duty on the company's finances.

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