15% stamp duty rate for residential property bought by companies

In the 2014 Budget, the government announced that a stamp duty rate of 15% would apply to residential property bought by a non-natural person if the chargeable consideration exceeds £500,000. The Finance Act 2014 (which received Royal Assent on 17 July 2014) amends Schedule 4A to the Finance Act 2003 to bring this change into effect. The amended rules apply to transactions with an effective date on or after 20 March 2014.

Conditions for 15% rate to apply

SDLT, at the rate of 15%, is charged on a high-value residential transaction if the acquisition is made:

  • By a company, defined as a body corporate other than a partnership, but not a company acting in its capacity as trustee of a settlement or as bare trustee.
  • By, or on behalf of, a partnership where one or more of the members is a company.
  • For the purposes of a collective investment scheme (as defined for the purposes of Part 17 of the Financial Services and Markets Act 2000).

In light of this change, buying a residential property for approximately £1.5 million would attract a stamp duty charge of £225,000. Conversely buying the residential property in an individual’s name, will only attract a stamp duty charge of £75,000. This is a significant difference.

We also stress that it is better for individuals to purchase residential buy to let investment property because a company cannot grant an assured shorthold tenancy to an individual.

Commercial property stamp duty rate is fixed at 4% above £500,000.

The material contained in this guide is provided for general purposes only and does not constitute legal or other professional advice. Appropriate legal advice should be sought for specific circumstances and before action is taken.

© September 2014

Please contact:

Victoria Eccles

DD +44 (0) 20 7553 4075

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