Stamp duty for a limited company

How much stamp duty do limited companies pay?

Limited companies will always pay the 5% stamp duty surcharge on top of the standard stamp duty rate on residential property purchases. This is the case whether it's the first property purchased by the company or not.

(This table was updated on 31st October 2024 to reflect the changes in the October budget)

Following the October 2024 budget, Should I still buy a buy-to-let using a limited company?

October's stamp duty changes apply to both personally owned and limited company owned properties. Therefore the advantages and disadvantages of limited companies remain unchanged.

For many investors, new and existing, limited companies are an effective and flexible way to purchase buy-to-let properties. They're particularly beneficial for higher rate tax payers, and investors looking to grow a portfolio.

If you're thinking about buying using a limited company, check out our free 10-lesson Pro Masterclass on limited companies. By the end of this comprehensive masterclass, you should feel confident in deciding if a limited company is right for you, or not.

Are there SDLT reliefs for limited companies?

Stamp duty is considered an expense as part of purchasing the property. You can't claim the cost of stamp duty against you rental income. However, when you come to sell the property, you can claim stamp duty as a capital expense, which will reduce the amount of Corporation Tax you'll pay on any gains from the sale.

Commercial property

There is no 5% surcharge on non-residential properties purchased by a limited company.

What is the 15% corporate rate of stamp duty?

Certain corporate bodies purchasing residential properties over £500k are charged a flat rate of 15% SDLT. This applies to companies, partnerships least one corporate partner, and investment schemes.

Reliefs may be available if the property is used in a property rental business or bought by a property developer or trader. Generally speaking, most property investors and developers pay the higher rate of SDLT, not the 15% rate.

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 5% surcharge would on the usual residential rates.

This is quite a tricky area of stamp duty land tax - we recommend gaining professional advice on your specific circumstances.

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 the limited company. 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.

Are any reliefs available?

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.

This is a complex area of stamp duty, so make sure you get advice from a specialist.