Read the original guidance here:
HMRC SDLT: SDLTM26000 – Reliefs: Charities relief

Stamp Duty Land Tax (SDLT) Relief for Charities

This guide explains the rules and conditions surrounding the relief from Stamp Duty Land Tax (SDLT) that is available to charities and charitable trusts. When a charity buys land or property, they can sometimes get relief from paying SDLT, which can make a significant financial difference. Below is a breakdown of key concepts, how to qualify for this relief, and situations that might affect eligibility.

General Overview

For charities, the SDLT relief is governed by specific laws outlined in FA03/S68 and FA03/SCH8. This relief helps ensure that charities can access and manage properties necessary for their operations without a heavy financial burden from SDLT.

Qualifying for the Relief

The detailed regulations which define who qualifies for this relief can be found in FA03/SCH8/PARA1. To qualify, charities must meet specific criteria:

• The property must be used for charitable purposes.
• The purchasing organization must be recognized as a charity under UK law.
• The transaction should involve a genuine purchase, not just a nominal transfer of resources.

Example of Charitable Relief Qualification

An example can help clarify the criteria for relief. If a charity purchases a community centre to hold events, workshops, and outreach programmes, that property is being used for its charitable mission. Because the centre’s main use aligns with the charity’s objectives, it is eligible for relief. This falls under the guidelines of FA03/SCH8/PARA1.

When Relief is Withdrawn

There are circumstances in which a charity may lose their SDLT relief after initially qualifying. These situations are detailed in FA03/SCH8/PARA2 and include:

• If the property is no longer used for charitable purposes.
• If the charity sells the property.
• If the charity changes its status and is no longer recognized as a charity.

Greater Part of the Land Held by Charity

A charity may also qualify for relief if it holds the largest share of the property, as stated in FA03/SCH8/PARA3. Here are the conditions that apply:

• The charity must own a significant part of the land.
• The property must be used primarily for charitable purposes.

Example of Charity Holding the Greater Part of the Land

For example, if a charity owns a large plot of land where it operates a nature reserve, and this land is mainly used to promote environmental education, the charity would qualify for SDLT relief based on holding the greater part of the property. This illustration can be referenced in FA03/SCH8/PARA3.

Non-Charity Purchasers

It is important to understand that the relief is specifically designated for charities. If a non-charitable entity purchases a property, they are not eligible for the same SDLT relief. They must adhere to the standard SDLT rates applicable to the property purchase, as outlined in SDLTM26035.

Detailed Rules for Charitable Trusts

Charitable trusts, like charities, can also benefit from SDLT relief. The detailed criteria for these trusts are explained in FA03/SCH8/PARA4. Key points include:

• The trust must operate for charitable aims and purposes.
• The property must be used in a way that furthers the trust’s charitable objectives.

When Relief for Charitable Trusts is Withdrawn

Similar to charities, there are scenarios when SDLT relief for charitable trusts can be revoked. These situations are described in FA03/SCH8/PARA2 and FA03/SCH8/PARA4. Conditions include:

• If the trust deviates from its charitable purposes.
• If the trust ceases to exist or alters its objectives away from charity.
• If the property is sold or transferred away from the trust.

These rules ensure that SDLT relief is directed only towards those organizations profoundly engaged in charitable activities. By maintaining these criteria, the government aims to support genuine charities while preventing misuse of the relief intended to assist them.