Stamp Duty for Limited Companies: The Complete Guide

If you bought a second property through a limited company – or have added to a significant property portfolio in a company partnership – you may have been subjected to paying extra stamp duty.

Whether you’re a seasoned property investor, a private landlord, or have just started to branch out into the world of buy-to-lets – you could make considerable tax savings by being aware of SDLT charges and when they apply. 

Of course, keeping track of these costs and additional charges can get pretty confusing, especially when you’re already dealing with a very changeable property market. 

Luckily for you, that’s where we come in.

At Stamp Duty Claims, our team of accountants, specialist tax consultants, chartered surveyors and legal advisors are on hand to tell you everything you can do when buying additional properties as a limited company. 

We’ll cover:

• Whether a limited company can buy a house?
• What is the Stamp Duty Rate for companies?
• Do limited companies pay additional stamp duties on buy-to-lets?
• How to avoid an additional rate of SDLT
• Are there any benefits of buying additional properties through a limited company
• And much more

When it comes to making successful claims against stamp duty overpayments on property investments, you’re in safe hands. 

Over the years, we’ve assisted thousands of people – both private landlords, second homeowners and buyers through companies with limited status – to build cases that claw cash back from HMRC. 

So if you think you’ve paid a higher rate of stamp duty when you shouldn’t have, we can help. 

Need even more advice about stamp duty for limited companies?

Let’s get started.

Can a Limited Company buy a house?

If you’re an independent professional, contractor, or entrepreneur functioning through a limited company, then you might have spent some time thinking about property purchases. 

According to Paragon Bank, there has been a huge surge of popularity towards investing in bricks and mortar – especially buy-to-lets – through a limited company. But it is crucial to consider all the pros and cons of this before making a commitment.

What’s classed as a ‘second property?’

Whether you’re buying additional properties through a limited company or are simply considering your options, if you already own a home then your new property will automatically be classed as a second home. 

In the eyes of HMRC, there is no difference as to whether you’ll be living in your second home full-time or if you’re planning to use it as your main residence while buying an additional property – you will still be charged on stamp duty. 

The same applies to additional dwellings bought for buy-to-let purposes, where you buy a property for the sole purpose of renting it out to tenants. This has also become a popular way for people to source – or boost – streams of income. 

Are there any benefits of buying additional properties through a limited company?

The main draw attracting people to buy investment properties through a company is the tax benefits. For example, if you’re operating as a private landlord, profits from your property rental business will be taxed via income alongside any other earnings.

But if you decide to purchase a buy-to-let in a limited capacity, then any money you make could be liable to corporation tax which at present, is 19%. 

For higher-rate taxpayers, you could make big savings by doing this instead of taking the usual route to purchase a property.

As private landlords can no longer take away their mortgage expenses from the income made on rental properties to reduce their overall tax bill, they receive tax relief on 20% of mortgage interest payments.

Although this means that higher rate taxpayers won’t get tax back on mortgage payments directly, as the credit only refunds tax at the basic rate, for limited companies mortgage interest is treated as a business expense. 

This means you can reduce this cost before paying corporation tax. 

But what does this mean for landlords with sizable property portfolios?

Well, if you have a number of investment homes that you’d like to pass to family members, purchasing property through a company with limited status can bypass large amounts of inheritance tax. 

This can be done successfully by making family members shareholders of the limited company. 

Are there any exceptions to stamp duty?

 In some cases, there are second properties that are completely exempt from Stamp Duty. These can include: 

• Freehold properties that have been purchased for under £40,000
• Motorhomes, caravans, or houseboats
• First-time buyers (might receive a reduced rate or ‘relief’ rather than a total exemption.)

You could also be exempt in circumstances where you were planning on living in your new home, but couldn’t sell the first one straight away. Should this happen, you might be able to claim back overpayments if you sell your previous home within 36 months. 

Bear in mind that here at Stamp Duty Claims, we specialise in reclaiming SDLT in relation to properties classed as ‘uninhabitable.’ 

Find out more about our processes and our team’s fantastic track record here. 

Is there any relief available for higher rates of stamp duty?

When it comes to the higher rate of SDLT, there are some occasions where the 15% is exempt in specific conditions. 

That is when a dwelling is bought by a limited company that has a specific use in mind, or by someone acting as a trustee of a settlement for the following reasons: 

• a property rental business
• property developers and trader
• property made available to the public
• financial institutions acquiring property in the course of lending
• property occupied by employees
• farmhouses
• a qualifying housing co-operative

Do limited companies pay stamp duty on a second property?

The standard rate of stamp duty for residential properties 

Much like the straightforward purchase of additional homes or a buy-to-let property as an individual, a company with limited status will always pay the 3% surcharge on a dwelling bought for over £40,000. 

However, this will still apply to those buying property through a limited company whether it’s their first time buying or not – as individual first-time buyers can benefit from SDLT relief. 

The standard rate of stamp duty for non-residential properties

However, for non-residential (or mixed-use properties) bought by a limited organisation, the basic rate of non-residential SDLT applies. That means there is no 3% surcharge in these instances. 

How do I avoid stamp duty as a limited company?

There are a few ways that you could avoid stamp duty as a limited company when buying a secondary property, which is mainly facilitated through claiming a refund. 

Of course, it’s not quite as straightforward as that! In order to build a successful case, you need to make sure you’re meeting certain criteria. 

The main cases tend to be: 

• Your primary residence was sold within three years of buying a new one
• The SDLT rate, or charge itself, was placed on a second home by mistake
• You plan to apply for a Stamp Duty Refund a year after the filing date of your original Stamp Duty Return
• You are applying for a refund three months after selling your primary residence 
• The second home is classed as ‘uninhabitable’

Here at Stamp Duty Claims, we specifically deal with creating claims relating to homes that have been wrongly identified as livable residences.

Want to find out more? We’ll talk about this next.

Applying for an SDLT Refund with Stamp Duty Claims

 At Stamp Duty Claims, we’re specialists when it comes to building SDLT cases around homes that are ‘uninhabitable’. 

This relates to one of the main reasons people get charged more for buying a second home, where it is another dwelling in addition to a primary property. 

But what happens when the property isn’t fit for anyone to live there? 

If it can’t meet the purpose it was bought for, then the higher rates of SDLT shouldn’t apply. 

This was first argued in a case back in 2019 – PN Bewley VS HMRC – where a couple bought a bungalow through their limited company. After providing plenty of evidence showing that the property was practically derelict (making the higher rate of Stamp Duty that was paid redundant) – the tribunal ruled in their favour.

This means we can now assist limited company owners who bought second properties and were unfairly charged a higher rate, especially in circumstances where the dwelling required plenty of work to make it a viable place to live. 

Although there’s nothing set in stone as to what makes a home ‘uninhabitable,’ we have a lengthy list of criteria that shows what we usually find makes a strong case. 

What happens when I get in touch? 

Evidence can be varied, with photographs, videos, receipts for building work, quotes, and even improvement notices all coming in handy.

Once we’ve sourced these, we’ll handle the rest – giving you time to get back and focus on the things that matter to you.

Our team will create a strong case and send it to the technical officer at HMRC, keeping you informed as to the process of your application at every step. 

If your rebate request is placed under review, we will work within the 30 day allocation to get your application moving again but if not, then you’re not expected to pay anything. 

Our guaranteed no-win, no-fee policy gives you full control, promising absolutely zero exposure or risk.

But with a 97.5% success rate, our expert team works hard to provide a hassle-free service that has been tried, tested, and trusted by clients up and down the country. 

Are you interested in starting a rebate with us? It’s easy to get started. 

Click here to book an easy assessment directly with the experts – or you can always arrange a callback at a time that suits you.