Stamp Duty – company reliefs


Stamp Duty can be a forgotten expense when it comes to property purchases and is usually quite a large expense for companies as there is a 3% surcharge on residential properties bought by companies.

There is a relatively unknown relief for companies wishing to acquire properties and keep their stamp duty liability to a minimum.

Companies who are set up with the purpose of purchasing properties from the personal representatives of deceased individuals can obtain exemption from Stamp Duty Land Tax if all of below conditions are met: –

  1. The purchase is in the course of a business set up to purchase properties from estates of deceased individuals;
  2. The deceased individual occupied the dwelling as their main or only residence at some time in the two years ending with the date of their death; and
  3. The area of land acquired does not exceed the permitted area of 0.5 of a hectare. A larger area may me permitted if it is required for the reasonable enjoyment of the dwelling. This does not include, for example, stables and paddocks, as these are not necessities for reasonable enjoyment.

If only points 1 and 2 can be satisfied partial relief may be claimed. So, the amount of Stamp Duty Land Tax will be calculated on a consideration amount being the difference between the permitted area and the total area.

Please note that relief can be withdrawn if: –

  1. More than £10,000.00 or 5% of the consideration for the acquisition, which ever is the greater (to a limit of £20,000.00) is spent on refurbishing the property; or
  2. A lease or licence is granted in respect of the property; or
  3. Any principals or employees of the company, or any person connected to them, are permitted to occupy the dwelling.

This relief can be a real saving when purchasing properties and it may well be worth considering whether you wish to set up a company in this way. Of course if you are looking to build a portfolio of properties this relief will not be of any use as it is withdrawn on the granting of a lease.

However, if you are a company that has a high turnover of properties or likes to buy properties to ‘flip’ them it may well be worth considering. For example, under the current calculations, if you buy a property for £150,000.00 you will save £4,500.00 by way of this Stamp duty relief.

Having and running company as above can save expense in acquiring properties and if you require any further information about this please contact us or a tax advisor to discuss next steps.

Sarah Ellis is a Legal Executive in the residential conveyancing department at Sintons. To speak to Sarah, please contact her at sarah.ellis@sintons.co.uk or 0191 226 7924.


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