Understanding SDLT Higher Rate Charges for Trusts and Non-Natural Persons

When the 17% SDLT Rate Does Not Apply to Company Trustees

A company does not automatically face the 17% SDLT rate when buying residential property as a trustee. The key issue is whether it is acting as trustee of a settlement, in which case the 17% rate does not apply, or only as a bare trustee or nominee, in which case the company is usually ignored and SDLT is worked out by looking at the real beneficial owner.

• A company acting as trustee of a settlement is outside the 17% higher SDLT charge, even if it is a corporate trustee.
• For these rules, a settlement means a trust other than a bare trust.
• If the company is only a bare trustee or nominee, SDLT usually looks through the trustee to the beneficial owner.
• The SDLT outcome depends on the trustee’s legal capacity, not just the name shown as purchaser in the transfer documents.
• If the beneficial owner is an individual, the 17% company rate will not apply; if the beneficial owner is a company, it may still apply.
• Care is needed because trust labels in documents may not match the true legal position, and there is a separate exception for some lease grants.

Scroll down for the full analysis.

When the 17% SDLT rate does not apply to company trustees

This page explains an important exception to the higher SDLT charge that can apply when a company buys residential property. If a company is buying as trustee of a settlement, it is outside that 17% charge. But if the company is only a bare trustee or nominee, the trustee is usually ignored and SDLT is worked out by looking at the real beneficial owner instead.

What this rule is about

SDLT can impose a higher rate on acquisitions of residential property by certain non-natural persons, including companies. The source material deals with one specific question: what happens where a company is involved as a trustee.

The key distinction is between:

• a company acting as trustee of a settlement, and
• a company acting only as a bare trustee or nominee.

That distinction matters because these two roles are treated differently for SDLT.

What the official source says

HMRC’s manual says that a company acting as trustee of a settlement is outside the scope of the 17% higher SDLT charge. This applies whether the company is a professional corporate trustee for many settlements or a trustee of just one settlement.

For this purpose, a settlement is defined by the legislation as a trust other than a bare trust.

The source then contrasts this with bare trustees and nominees. Where property is acquired by a nominee or bare trustee, SDLT generally applies as if the property were vested in the person for whom the trustee acts, and as if the trustee’s acts were the acts of that person. The manual notes one statutory exception for grants of leases, but otherwise the bare trustee is ignored.

So the legal treatment is:

• trustee of a settlement: the company trustee is not caught by the 17% charge merely because it is a company;
• bare trustee or nominee: look through the trustee and identify the real purchaser for SDLT purposes.

What this means in practice

You cannot decide the SDLT treatment just by asking whether a company appears on the transfer. You must ask in what capacity that company is acting.

If the company is acting as trustee of a settlement, the special 17% company rate does not apply. SDLT is instead charged under the ordinary rules that apply to that transaction.

If the company is only a bare trustee, the company is effectively ignored for most SDLT purposes. The return should identify the beneficial owner as the purchaser. The SDLT outcome then depends on who that beneficial owner is.

This can produce very different results:

• if the beneficial owner is an individual, the 17% company rate does not apply, although the higher rates for additional dwellings might still need to be considered;
• if the beneficial owner is a company, the 17% rate can still apply, because the law treats the company beneficiary as the real purchaser.

In short, the trust label does not itself solve the SDLT issue. The real question is whether this is a settlement trust or a bare trust arrangement.

How to analyse it

A sensible way to approach the point is to work through these questions:

• Is the property residential, and is the transaction one to which the higher company rate could in principle apply?
• Who is shown as purchaser in the legal documentation?
• Is that person or company acting as trustee?
• If so, is the trust a settlement, or is it only a bare trust or nominee arrangement?
• If it is a bare trust, who is the beneficial owner for whom the trustee is acting?
• Once the real purchaser is identified under the SDLT rules, which charging provisions apply to that purchaser?

The central legal question is the nature of the trust relationship. A settlement is any trust other than a bare trust. So the analysis often turns on whether the trustee has real fiduciary duties and powers beyond simply holding the property for a beneficiary absolutely entitled to it.

For SDLT filing purposes, the source material makes clear that where a bare trustee is ignored, the return should identify the actual purchaser, not the bare trustee.

Example

Illustration 1: A company buys a dwelling for £2.5 million as trustee of a discretionary trust. Because it is acting as trustee of a settlement, the 17% higher SDLT charge does not apply simply because the trustee is a company. SDLT is charged at the rates that otherwise apply.

Illustration 2: A company buys a dwelling as bare trustee for an individual. The company is ignored for SDLT purposes. The individual is treated as the purchaser, and the SDLT position is worked out by reference to that individual. The 17% company rate does not apply, but the position on higher rates for additional dwellings depends on the individual’s wider property ownership.

Illustration 3: An individual buys a dwelling as bare trustee for a company. The individual trustee is ignored. The company is treated as purchaser. If the transaction otherwise falls within the higher company charge, the 17% rate applies.

Why this can be difficult in practice

The difficult part is often not the SDLT rule itself, but classifying the trust correctly.

In practice, trust arrangements are not always described clearly in transaction documents. Parties may loosely use terms such as “trustee”, “nominee” or “bare trustee” without matching the legal substance. For SDLT, substance matters.

A further difficulty is that people sometimes assume any purchase by a trustee company escapes the 17% rate. That is too broad. The exclusion applies to a company acting as trustee of a settlement. It does not apply where the company is merely a bare trustee and the real purchaser, looked through the trust, is a company that falls within the higher charge.

The source also mentions an exception for grants of leases in the bare trustee rule, but does not explain it further on this page. That means care is needed before applying the same look-through approach automatically to lease grants.

Key takeaways

• A company acting as trustee of a settlement is outside the 17% SDLT higher charge.
• A bare trustee or nominee is usually ignored for SDLT, so you must identify the real beneficial owner.
• The SDLT result depends on the trustee’s legal capacity, not just on who appears as purchaser in the conveyancing documents.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Understanding SDLT Higher Rate Charges for Trusts and Non-Natural Persons

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