Company staff housing: when an employee does not qualify for SDLT relief
Qualifying employees and company staff housing
A company may obtain staff-housing relief only where the proposed resident is a qualifying employee or partner. The 10% ownership and excluded-domestic-services rules are central.
- Check profit rights, company interests and interests in the home.
- A director can be an employee, but may still be excluded.
- Domestic staff for an owner or connected person do not qualify.
Scroll down for the full analysis.
Read the original guidance here:
Company staff housing: when an employee does not qualify for SDLT relief
Company staff housing: when an employee does not qualify for SDLT relief
A company may be able to avoid the special stamp duty rate when it buys a home for staff. However, the person living there must be a qualifying employee. Owners, directors with large stakes, and domestic staff serving owners may not count. That point can determine whether relief is available.
What this rule is about
This rule forms part of the relief for a business buying a home to provide living space for staff. In suitable cases, the relief prevents the special SDLT charge from applying to certain company home purchases.
Put simply, the relief is for genuine business staff housing. It is not intended to cover a home made available to somebody with a substantial financial interest in the business or property.
That distinction can be costly.
What the official source says
HMRC’s manual says an employee will normally qualify unless they have a 10% or greater share in the business, the company that owns the home, or the home itself. Legislation contains the detailed test.
- The person must be employed for the relievable business.
- A director or company secretary can count as an employee because holding an office is included.
- The person cannot have a 10% or greater share in the income profits of the business.
- The person cannot have a 10% or greater share in a company that beneficially owns the home.
- The person cannot have a 10% or greater beneficial interest in the home.
- A person providing excluded domestic services does not qualify, whatever their financial stake.
Share ownership alone does not determine the 10% test. Profit rights or home interests also matter. Looking only at the company share register may therefore give the wrong answer.
Domestic services are excluded if the employee’s duties include services connected with the actual or planned occupation of the staff home, or a linked home. Connection with a beneficially entitled person is required.
What this means in practice
Where the company buys a home for an ordinary employee to live in because of the business, this part of the test may be met. Yet the wider staff-housing conditions must still be satisfied.
An employee’s title does not solve the problem. A director may count as an employee, but a director with a 10% or greater stake does not qualify under this rule.
- Check profit rights as well as ordinary shares.
- Check whether the employee owns any part of the home.
- Check ownership through another company or arrangement.
- Check whether the proposed resident is domestic staff for an owner or a connected person.
- Keep a clear record of the business reason for providing the home.
HMRC gives the example of a company controlled by Ms R. It employs her cook and lets the cook live in a company-owned home. In HMRC’s view, the company cannot use this relief. The cook provides domestic services connected with Ms R’s occupation.
How to analyse it
Begin with the purpose of the home. Next, work through the proposed resident’s role and financial links. Do not start with the word “employee” on their contract.
- Is the company, or a company in its group, carrying on a relievable business?
- Is the home being bought to provide living space for staff?
- Will that use be solely or mainly for the business?
- Is the intended resident employed for that business, or a qualifying partner?
- Does that person have a 10% or greater profit share?
- Do they have a 10% or greater interest in the owning company or home?
- Do their duties include domestic services for an owner or someone connected with an owner?
- Could those services relate to a linked home rather than the staff home itself?
What is the key question? It is not simply “does this person work for the company?” Ask instead: “are they a genuine business employee without a substantial stake, and are they not domestic staff for an owner?”
Example
Imagine a trading company buys a house for Sam, a full-time site manager. Sam has no shares, no profit entitlement and no interest in the house. His work is for the business, not for an owner personally. Neither rule disqualifies Sam here.
Now change one fact. Sam holds 10% of the company’s profit rights. His 10% profit rights exclude him, even if he has no shares and does the same job.
Why this can be difficult in practice
Real arrangements are often less clear than the examples. A person may work for the business but also perform personal tasks for an owner. The connection between their duties and an owner’s occupation can matter.
- A low shareholding may not tell the full story if the person has profit rights.
- A director is not automatically excluded, but their financial stake matters.
- Domestic work is not confined to a job called “cook”, “cleaner” or “nanny”.
- A service linked to another connected home can still matter.
- Plans and actual use should match; a label on a contract will not settle the facts.
Linked homes create a further trap. The statute refers to linked-property rules in the Annual Tax on Enveloped Dwellings legislation. The source material does not give enough detail to decide every linked-home question from a simple description.
Key takeaways
- An employee with a 10% or greater relevant stake does not qualify.
- Directors can count as employees, but ownership or profit rights can exclude them.
- Domestic staff serving an owner or connected person cannot use this staff-housing route.
Technical analysis
For advisers, and for anyone who wants to check the law behind this page. You do not need this section to understand the guidance above.
Legislation
- FA 2003 Schedule 4A para 3 — special rate for certain company home purchases
- FA 2003 Schedule 4A para 5D — relief for homes made available to business staff
- FA 2003 Schedule 4A para 5E — who can count as a qualifying employee
- FA 2013 section 116 — conditions for properties to count as linked
- FA 2013 section 117 — further rules about linked properties
Official guidance
The pages below are HMRC’s guidance. Guidance is not law. It sets out how HMRC reads the legislation, and it is not binding on you, on a tribunal or on a court. Where guidance and the legislation differ, the legislation wins. HMRC can also change or withdraw guidance, and it may not cover your facts.
Where this is not settled
- Whether services are connected with the occupation of the relevant home or a linked home can depend closely on the facts.
- The supplied material does not explain every part of the linked-property tests or the wider meaning of connected persons.
Evidence you would need
This kind of case is decided on the facts of the individual property. These are the records that usually settle it, and the ones an adviser would ask you for.
- The employee’s contract, job description and actual duties
- Details of shares, profit rights and any beneficial interest in the home
- Company and partnership ownership records
- Evidence of who will live in the home and why
- Plans showing whether another home may be linked
Explore this with an AI
Readers often want to test their own situation. Copy the prompt below into ChatGPT, Claude or Gemini. It hands the model the actual legislation for this page rather than letting it answer from memory, and tells it to be explicit about what is uncertain. What comes back is information, not advice – check it against the links above.
I am researching UK Stamp Duty Land Tax (SDLT), which applies in England and Northern Ireland. MY QUESTION Company staff housing: when an employee does not qualify for SDLT relief [Replace this with your own situation: what you are buying, the price, the dates, who the buyer is, and what you plan to do with the property.] THE LAW THIS TURNS ON - FA 2003 Schedule 4A para 3 - special rate for certain company home purchases https://www.legislation.gov.uk/ukpga/2003/14/schedule/4A/paragraph/3/2025-11-17 - FA 2003 Schedule 4A para 5D - relief for homes made available to business staff https://www.legislation.gov.uk/ukpga/2003/14/schedule/4A/paragraph/5D/2025-11-17 - FA 2003 Schedule 4A para 5E - who can count as a qualifying employee https://www.legislation.gov.uk/ukpga/2003/14/schedule/4A/paragraph/5E/2025-11-17 - FA 2013 section 116 - conditions for properties to count as linked https://www.legislation.gov.uk/ukpga/2013/29/section/116 - FA 2013 section 117 - further rules about linked properties https://www.legislation.gov.uk/ukpga/2013/29/section/117 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09625 HOW I WANT YOU TO ANSWER 1. Work from the legislation above. Read it before answering. Guidance from HMRC is its view of the law, not the law, and does not bind a tribunal or a court. 2. Tell me what the rule actually requires, in plain English. 3. Tell me which facts decide the answer, and which facts would change it. 4. Tell me what evidence I would need to support the position. 5. Be explicit about anything unsettled or fact-sensitive. Do not guess. 6. Your training data has a cutoff and SDLT rates and reliefs change at fiscal events. Say so if you are not sure the law is current. POINTS ALREADY KNOWN TO BE UNCERTAIN ON THIS TOPIC - Whether services are connected with the occupation of the relevant home or a linked home can depend closely on the facts. - The supplied material does not explain every part of the linked-property tests or the wider meaning of connected persons. Do not give me a conclusion you cannot support from the provisions above.
Legislation links show Finance Act 2003 as it stood on 2025-11-17. The law may have changed since, and the rules that apply are those in force on the date of your transaction. The official guidance this page is based on is here.
This page was last updated on 31 August 2026
Useful article? You may find it helpful to read the original guidance here: Company staff housing: when an employee does not qualify for SDLT relief
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