Understanding SDLT Higher Rate Charge for Non-Natural Persons Acquiring Residential Property

When an employee is a qualifying employee for the 15% SDLT rate

For the 15% SDLT rules on high-value residential property bought by companies and other non-natural persons, employee occupation does not automatically avoid the higher charge. The occupier must be a qualifying employee, which usually means they are an employee or office-holder with less than a 10% stake in the relevant business, company or property, and they must not be occupying the dwelling as domestic staff for a connected owner or beneficiary.

• Directors and company secretaries can count as employees for this purpose, as office-holders are included.
• An employee is not qualifying if they are entitled to 10% or more of trade profits, 10% or more in the company holding the dwelling, or 10% or more in the dwelling interest itself.
• Domestic staff such as cleaners, cooks and nannies are excluded if they occupy the property to provide services connected with a person linked to the beneficial owner or future beneficial owner.
• The domestic services exclusion can apply even if the employee has no ownership stake at all.
• It can be difficult in practice to assess ownership rights, beneficial entitlement, connected persons and whether someone’s role is truly domestic services.

Scroll down for the full analysis.

SDLT 15% rate: when an employee counts as a “qualifying employee”

This page explains a narrow but important point in the SDLT rules for companies and other non-natural persons buying high-value residential property. In some cases, a dwelling occupied by an employee can fall outside the 15% SDLT rate. But that depends on whether the individual is a “qualifying employee”. The rule is stricter than it may first appear, especially where the employee has an ownership stake or provides domestic staff services.

What this rule is about

The source material deals with the higher 15% SDLT charge that can apply when certain non-natural persons, such as companies, acquire residential property. One of the reliefs from that charge can apply where the dwelling is used in connection with employees. This page focuses on who can count as a qualifying employee for that purpose.

The point matters because a property occupied by an employee will not automatically escape the 15% rate. The employee must fall within the statutory definition. If they do not, the relief may be unavailable and the higher SDLT charge may still apply.

What the official source says

HMRC’s manual says that an employee will generally be a qualifying employee unless they are entitled to a 10% or greater share in any of the following:

• the income profits of the trade,
• any company that is entitled to the single-dwelling interest, or
• the single-dwelling interest itself.

The manual also makes clear that “employee” includes an office-holder, such as a director or company secretary.

However, there is a separate exclusion for an employee who provides “excluded domestic services”. If the employee falls within that category, they are not a qualifying employee even if they have no ownership stake at all.

The manual explains that this exclusion applies where a dwelling is occupied as living accommodation by a person providing domestic services in connection with the occupation of the dwelling by an individual who is connected with a person who is, or is to be, beneficially entitled to the relevant interest. The accommodation may be within the same dwelling or in a linked dwelling.

HMRC gives examples of domestic staff such as a cleaner, cook or nanny. Its example is that if Ms R controls a company which owns a dwelling, relief is not available where the company employs Ms R’s cook and allows the cook to occupy the dwelling.

What this means in practice

There are really two separate filters.

First, the person must be an employee or office-holder. That part is relatively wide. Directors and company secretaries are not excluded just because they hold office rather than work under an ordinary employment contract.

Second, the person must not be too closely aligned with the ownership or profits of the business or property. If they are entitled to 10% or more of relevant trade profits, 10% or more in the company holding the dwelling, or 10% or more in the dwelling interest itself, they are not a qualifying employee.

Third, even if they pass the ownership test, they still fail if they are there as domestic staff serving a connected individual who is beneficially entitled, or will become beneficially entitled, to the relevant interest. That exclusion is aimed at arrangements where a company-owned dwelling is effectively being used to house personal staff connected with an owner or controller.

So, in practical terms, the relief is aimed at genuine employee occupation, not occupation by owner-managers with substantial stakes and not accommodation for personal domestic staff of connected individuals.

How to analyse it

A sensible way to approach the issue is to ask these questions in order:

• Is the property within the part of the SDLT regime where the 15% rate for certain non-natural persons is potentially in point?
• Is the occupier an employee or office-holder of the company or partnership?
• Does that person have a 10% or greater entitlement to trade income profits?
• Do they have a 10% or greater entitlement in the company that holds the single-dwelling interest?
• Do they have a 10% or greater entitlement in the single-dwelling interest itself?
• Are they providing domestic services, such as those of a cleaner, cook or nanny?
• If so, are those services provided in connection with occupation by an individual connected with a person beneficially entitled, or to be beneficially entitled, to the relevant interest?
• Is the accommodation within the dwelling itself or in a linked dwelling?

If the answer to any of the ownership questions is yes, the employee is not a qualifying employee. If the domestic services exclusion applies, they are also not a qualifying employee, regardless of their ownership position.

Example

Illustration: A company buys a dwelling. One of its directors lives there. If that director is an office-holder but has no 10% or greater share in the company, the trade profits, or the property interest, they may still be capable of being a qualifying employee, assuming no other rule prevents relief.

By contrast, if the occupier is a cook employed to provide domestic services for an individual connected with the beneficial owner or future beneficial owner of the relevant interest, that person is excluded from being a qualifying employee. It does not matter that the cook has no stake in the company or the property.

Why this can be difficult in practice

The source material is short, but the underlying concepts can be fact-sensitive.

One difficulty is identifying what counts as being “entitled” to a 10% or greater share. That may require close examination of partnership profit-sharing arrangements, share rights, beneficial ownership, and any rights in the property itself.

Another difficulty is the domestic services exclusion. In straightforward cases, a cleaner, cook or nanny will clearly fall within it. But in mixed-role situations, it may be harder to decide whether the person is really providing domestic services, or whether their role is something else.

Connection and beneficial entitlement can also be technical. The manual refers to an individual who is connected with a person who is, or is to be, beneficially entitled to the higher threshold interest. In practice, that may require careful tracing of who really benefits from the property-holding structure.

The reference to a “linked dwelling” adds another layer. The manual points to the ATED legislation for that concept, so the answer may depend on rules found outside the SDLT provisions themselves.

Finally, this page only addresses the meaning of qualifying employee. Whether the 15% SDLT rate applies overall, or whether a relief is available, depends on the wider statutory framework as well.

Key takeaways

• An employee can be a qualifying employee only if they do not have a 10% or greater stake in relevant profits, the company, or the dwelling interest.
• Directors and company secretaries are included as employees for this purpose.
• Domestic staff accommodation can prevent relief, even where the staff member has no ownership stake at all.

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 Charge for Non-Natural Persons Acquiring Residential Property

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