SDLT Higher Rates: Rules for Companies and Trustees Buying Additional Properties
Higher SDLT rates for companies and trustees buying dwellings
When a dwelling is bought by a company or through a trust, the higher SDLT rates can apply in different ways depending on who is treated as the purchaser. Companies are usually taxed under special non-individual rules, while for trusts the outcome depends on the type of trust and whether the beneficiary or the trustees are tested.
- A company usually pays the higher SDLT rates if it buys a major interest in a dwelling for at least £40,000 and the interest is not subject to a lease with more than 21 years left to run.
- For a bare trust, the trustees are ignored and the absolutely entitled beneficiary is treated as the purchaser.
- For a trust with a life interest or income interest, the relevant beneficiary is treated as the purchaser, so their own property position and possible main residence replacement may matter.
- Other trusts, including many discretionary and accumulation trusts, are generally taxed in the same way as a company.
- The key practical issue is classifying the trust correctly, because similar-looking trusts can have very different SDLT outcomes.
Scroll down for the full analysis.
Read the original guidance here:
SDLT Higher Rates: Rules for Companies and Trustees Buying Additional Properties
When companies and trustees pay the higher SDLT rates on dwellings
This page explains how the higher rates for additional dwellings apply when the buyer is not a straightforward individual purchaser. In particular, it covers companies and different types of trust. The key point is that the SDLT rules do not treat all trustees in the same way. Sometimes the trust beneficiary is treated as the real purchaser. In other cases, the trustee is taxed more like a company.
What this rule is about
The higher SDLT rates for additional dwellings are designed mainly for purchases of residential property where the buyer already has, or is treated as having, another dwelling interest. For individual buyers, that usually involves testing whether they own another dwelling and whether the purchase replaces their only or main residence.
But those tests do not apply in the same way to every non-individual buyer. The legislation draws an important distinction between:
- companies,
- trustees of bare trusts,
- trustees of trusts with a life interest or income interest, and
- trustees of other trusts, such as many discretionary or accumulation trusts.
That distinction matters because it changes whose property position is tested and whether the replacement of main residence rules can be relevant at all.
What the official source says
HMRC’s manual says that a company buying a major interest in one or more dwellings will be charged the higher rates if, for at least one dwelling, both of the following are true:
- Condition A: the chargeable consideration for the dwelling, or major interest in it, is £40,000 or more.
- Condition B: the interest acquired is not subject to a lease with more than 21 years left to run at the date of purchase.
If no dwelling in the transaction meets both of those conditions, the higher rates do not apply.
For trustees, the result depends on the type of trust.
In a bare trust, the trustees are ignored for these purposes. The beneficiary who is absolutely entitled is treated as the purchaser instead.
In a trust with a life interest or an income interest, the trustees are again not the relevant purchaser for this test. Instead, the beneficiary who has the right to occupy the dwelling for life, or the right to receive income from it, is treated as the purchaser.
In any other trust, the trustees are tested in broadly the same way as a company purchaser. So if the dwelling meets the £40,000 threshold and is not reversionary on a lease with more than 21 years left, the higher rates apply.
The manual also notes that this company-style treatment applies to trusts where trustees can distribute income at their discretion among a class of beneficiaries, and to trusts that accumulate income.
It further states that where a discretionary trust purchases a dwelling and the trust provides for a beneficiary to live there until death, or to receive income from it, that beneficiary is treated as the purchaser when deciding whether the higher rates apply.
What this means in practice
If a company buys a dwelling, the higher rates usually apply automatically once the basic property conditions are met. There is no need to ask whether the company is replacing a main residence in the way an individual might. The company is simply tested under the special non-individual rules.
With trusts, the practical question is: whose circumstances matter?
If the trust is a bare trust, look through the trustees and test the beneficiary.
If the trust gives a beneficiary a right to occupy for life or a right to the income, test that beneficiary instead of the trustees.
If the trust does neither of those things, the trustees are generally taxed like a company. In that case, the higher rates depend mainly on the nature and value of the dwelling interest being bought, not on whether any beneficiary owns another home or is replacing a main residence.
This can produce very different outcomes for trusts that may look similar in everyday language. A trust with a clear life tenant may be tested by reference to that person’s own property ownership. A discretionary trust with no such qualifying beneficiary may fall into the stricter company-style treatment.
How to analyse it
A sensible way to analyse a trust or company purchase is to work through these questions in order.
Is the buyer a company or a trustee?
If it is a trustee, what type of trust is it?
- Is it a bare trust, where the beneficiary is absolutely entitled?
- Is there a beneficiary with a right to occupy the dwelling for life?
- Is there a beneficiary with a right to the income from the dwelling?
- If not, is it another type of trust, such as a discretionary or accumulation trust?
Who is treated as the purchaser for higher-rates purposes?
- Bare trust: the absolute beneficiary.
- Life interest or income interest trust: the relevant beneficiary.
- Other trust: the trustee.
Does the property being bought meet the basic dwelling tests for the higher rates?
- Is there a major interest in a dwelling?
- Is the chargeable consideration at least £40,000?
- Is the acquired interest free of any lease with more than 21 years left to run?
If a beneficiary is treated as the purchaser, apply the individual-style higher-rates test to that beneficiary.
The manual says that, for a single dwelling purchase by trustees of a life interest or income trust, the trustees must consider whether that beneficiary meets Conditions C and D. In practical terms, this means asking whether the beneficiary owns another relevant dwelling interest at the end of the day and, if so, whether the purchase is nevertheless a replacement of that beneficiary’s main residence.
If the trustee is treated like a company, do not apply the individual replacement-of-main-residence analysis unless the legislation specifically requires it. The manual’s point is that these trusts are taxed under the company-style rule instead.
Example
Illustration: A trust buys a house using trust funds.
Case 1: The trust gives L the right to live in the house for life, or to receive the rental income from it. In that case, L is treated as the purchaser for deciding whether the higher rates apply. If L already owns another dwelling interest of the kind counted by the rules, the higher rates may apply unless the purchase is a replacement of L’s main residence.
Case 2: The trust does not give any beneficiary a life interest or income interest. Instead, the trustees can distribute income among several beneficiaries as they choose. In that case, the trustees are taxed like a company. If the dwelling costs at least £40,000 and is not subject to a lease with more than 21 years left, the higher rates apply.
Why this can be difficult in practice
The main difficulty is classification of the trust.
Trust arrangements are not always labelled in a way that matches the SDLT rules. A trust may be described informally as discretionary, but still contain rights that amount to a life interest or an income interest for these purposes. Equally, a trust may benefit a particular person in practice without giving that person the kind of legal entitlement needed for the beneficiary to be treated as the purchaser.
Another difficulty is that the manual is explaining legislation by reference to conditions used elsewhere in the higher-rates rules. That means you often have to connect this page with the wider framework. For example, where a beneficiary is treated as the purchaser, the outcome can depend on that beneficiary’s existing property interests and whether the transaction replaces their main residence. Those are fact-sensitive questions.
There can also be mixed or changing trust terms. If a discretionary trust purchase is accompanied by rights for a beneficiary to occupy for life or receive income, the manual indicates that the beneficiary may then be treated as the purchaser. So the trust deed and the actual rights created need careful reading.
Key takeaways
- A company buying a dwelling usually pays the higher SDLT rates if the purchase price is at least £40,000 and the interest is not subject to a lease with more than 21 years left.
- Trustees are not all treated the same: bare trusts and life or income interest trusts are generally looked through to the beneficiary.
- Other trusts, including many discretionary and accumulation trusts, are generally taxed like companies for higher-rates purposes.
This page was last updated on 24 March 2026
Useful article? You may find it helpful to read the original guidance here: SDLT Higher Rates: Rules for Companies and Trustees Buying Additional Properties
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