Where residential property is purchased by a “non-natural person” and the value of the property exceeds £500,000.00, the slab rate of stamp duty land tax (‘SDLT’) applies. For the purposes of the SDLT regime, “non-natural persons” include companies, partnerships (where one or more of the partners is a company) and collective investment schemes.
The slab rate was designed to discourage corporate ownership of dwellings for personal use. With effect from the 31st of October 2024, the slab rate sits at 17% of the purchase price for the dwelling.
It is important to note that the effective rate can be increased to 19% due to the operation of the 2% surcharge on non-UK resident companies, which is an extremely punitive rate of charge to SDLT.
In addition to the slab rate, there are annual tax on enveloped dwellings implications for company purchasers which should also be given careful consideration. In particular, the chargeable amounts for the period 1st of April 2025 to 31st of March 2026 can impose an annual charge of up to £292,350.00 depending on the value of the residential property.
Relief for SDLT and ATED may be available subject to the commercial use of the property. However, relief must be claimed on the land transaction return and ATED return respectively, and careful consideration should be given as to the availability of a relief.
If you require any assistance in purchasing a residential property through your company, please do not hesitate to contact one of our dedicated tax specialists, John Feaster or Kieran Berry, who are on hand to assist.