Stamp duty when a company or trust buys a home
Companies and trusts
A company can fall within the higher SDLT rates without owning another home. Trust purchases depend on the trust terms and, in some cases, the beneficiary’s position.
- Companies are tested by the price and lease conditions.
- Bare-trust and life-interest beneficiaries may be treated as buyers.
- Discretionary trusts are generally tested like companies.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty when a company or trust buys a home
A company buying a home can face the higher stamp duty rates even if it owns no other property. For most companies, the key questions are simple: was at least £40,000 paid, and is the property free from a long lease? Trusts work differently. The trust deed can change the answer.
What this rule is about
People often call the extra SDLT rates the second-home surcharge. That label can mislead when the buyer is a company or a trust.
The rules usually test a person buying a second home by looking at what they own at the end of completion day. The rules do not test a company that way. Instead, the law has a separate route for companies and other non-individual buyers.
Trusts need more care. Depending on the rights that the trust deed gives a beneficiary, the tax result may follow that beneficiary rather than the people named as trustees on the purchase papers. Trustee names alone do not control.
What the official source says
HMRC’s manual says that a company buying one or more homes is within the higher-rates rules if at least one bought home passes both of these tests. This reflects the separate statutory rules for buyers that are not individuals.
- The amount paid for that home is £40,000 or more.
- The interest bought is not the reversion to a lease with more than 21 years left to run.
- For several homes bought together, only one needs to pass both tests.
- If no bought home passes both tests, the higher rates do not apply under these company rules.
There is no need to ask whether the company already owns another home. Nor is there a company version of replacing the home you live in.
For trusts, the legislation separates three broad situations. The beneficiary’s legal right controls. The trust’s name does not control.
- In a bare trust, the rules treat the person absolutely entitled to the property as the buyer.
- A person can be absolutely entitled even if they are too young, or lack capacity, to hold the legal title themselves.
- For a trust giving a beneficiary a right to live in the home for life, the rules treat that beneficiary as the buyer.
- The same applies where a beneficiary has a right to income from the home.
- A trust where trustees choose who receives income is generally tested like a company buyer.
HMRC’s manual also refers to a beneficiary who has an entitlement to live in a property until death or receive its income. The statutory question is whether the trust terms give that person the required entitlement.
What this means in practice
If a company buys a £40,000 or more home without the long-lease feature, the higher SDLT rates can apply. It does not matter that this is the company’s first property purchase.
With a bare trust, look through the trustees. The beneficiary’s position decides whether the higher rates apply.
A life or income trust follows a similar approach. If you treat the named beneficiary as buying one home, apply the individual tests to that person, including their other property interests and whether they are replacing their main home. Those details matter.
- Check who has the legal right to the trust property.
- Do not assume the rules test all trustees as though they owned the property themselves.
- Do not assume the rules treat a discretionary beneficiary as the buyer.
- Read the trust deed before deciding which SDLT test applies.
- Record the position at the effective date of the purchase.
This is the part people get wrong: a trustee’s personal home ownership may be beside the point. A beneficiary’s rights may matter far more.
How to analyse it
Start with the buyer shown on the contract. Then work through the trust position, if there is one, before considering the higher-rates tests.
- Is the buyer a company, another non-individual body, or trustees?
- Is one home being bought, or several?
- Was at least £40,000 paid for a relevant home?
- Is the interest bought free from a lease with more than 21 years left?
- Is this a bare trust, with someone absolutely entitled to the property?
- Does any beneficiary have a right to occupy for life or receive income?
- If so, would the higher rates apply if that beneficiary bought instead?
- If the trust is discretionary, does any beneficiary really have an enforceable life or income right?
Ask one further question: where an apparent right depends on the trustees’ choice, do the trust terms create a legal entitlement, or merely permit the trustees to provide it? That distinction can decide the tax.
Example
Northfield Ltd buys a flat for £250,000. The flat is not the reversion to a lease with more than 21 years left. It meets both company tests, so the purchase falls within the higher-rates rules.
Now change the buyer. Two trustees buy the same flat using trust funds. The deed gives Priya a right to receive all rental income from the flat during her lifetime. These rules treat Priya, rather than the trustees, as the buyer.
If Priya owns another relevant home at the end of that day and this purchase is not replacing her main home, the higher rates can apply. If the deed instead lets the trustees decide which beneficiaries receive income, the trustees are normally tested like a company buyer.
Why this can be difficult in practice
Trust documents are often old, amended, or written in broad terms. A title may say that people act as trustees, but it will not usually reveal every beneficiary’s right.
You might think regular income payments prove an income entitlement. They do not necessarily. Trustees may have made those payments using a discretion.
- A trust’s name may not match its legal effect.
- A beneficiary can have rights even where trustees hold the legal title.
- More than one beneficiary may have a life or income entitlement.
- The length and nature of a lease must be checked at the relevant date.
- The amount paid may need to be identified for each home in a multi-home purchase.
- For a life or income beneficiary, evidence of other homes and main-home replacement may be needed.
HMRC’s manual is useful for understanding its approach. It is not the law. If the manual and the trust deed appear to point in different directions, the statutory wording and the actual trust rights remain central.
Key takeaways
- A company can face higher SDLT rates on its first home purchase.
- The £40,000 and lease tests are central for companies and many trustees.
- For trusts, the beneficiary’s legal rights can decide who is tested.
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 4ZA para 2 — how a transaction becomes a higher-rates transaction
- FA 2003 Schedule 4ZA para 3 — the four tests for one home bought by an individual
- FA 2003 Schedule 4ZA para 4 — higher rates for one home bought by a non-individual
- FA 2003 Schedule 4ZA para 7 — higher rates for several homes bought by a non-individual
- FA 2003 Schedule 4ZA para 10 — when a trust beneficiary is treated as the buyer
- FA 2003 Schedule 4ZA para 11 — trust homes treated as held by beneficiaries
- FA 2003 Schedule 4ZA para 13 — higher rates for certain trustees buying homes
- FA 2003 Schedule 16 para 1 — what counts as a bare trust
- FA 2003 Schedule 16 para 3 — how bare trustees are treated for SDLT
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
- A trust described as discretionary may still give a beneficiary an enforceable right to occupy a home for life or receive income. The exact trust terms must be read.
- A right to use a property, or a pattern of income payments, may not by itself show the required legal entitlement. The trust documents need to establish it.
- This page does not determine whether another SDLT charge or relief may also apply to the same purchase.
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.
- Signed purchase contract, transfer and completion statement — who bought the property, what was paid and the relevant completion date
- Land Registry title, title plan and any lease — the interest bought and whether a lease had more than 21 years left
- Company incorporation record and board minutes — whether the buyer was a company and who authorised the purchase
- Signed trust deed and any later deeds of variation — whether the trust is bare, gives a life or income right, or is discretionary
- Letter of wishes and trustee resolutions — whether a beneficiary had a legal right or only a trustee decision in their favour
- Trust accounts and income records — how income was dealt with and whether payments followed a fixed entitlement
- Land Registry records and lease details for the beneficiary’s other homes — whether they held another relevant home at the end of the purchase day
- Valuation evidence for any other home — whether its market value reached £40,000
- Sale papers and occupation records for an old main home — whether a life or income beneficiary was replacing the home they lived in
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 Stamp duty when a company or trust buys a home [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 4ZA para 2 - how a transaction becomes a higher-rates transaction https://www.legislation.gov.uk/ukpga/2003/14/schedule/4ZA/paragraph/2/2025-11-17 - FA 2003 Schedule 4ZA para 3 - the four tests for one home bought by an individual https://www.legislation.gov.uk/ukpga/2003/14/schedule/4ZA/paragraph/3/2025-11-17 - FA 2003 Schedule 4ZA para 4 - higher rates for one home bought by a non-individual https://www.legislation.gov.uk/ukpga/2003/14/schedule/4ZA/paragraph/4/2025-11-17 - FA 2003 Schedule 4ZA para 7 - higher rates for several homes bought by a non-individual https://www.legislation.gov.uk/ukpga/2003/14/schedule/4ZA/paragraph/7/2025-11-17 - FA 2003 Schedule 4ZA para 10 - when a trust beneficiary is treated as the buyer https://www.legislation.gov.uk/ukpga/2003/14/schedule/4ZA/paragraph/10/2025-11-17 - FA 2003 Schedule 4ZA para 11 - trust homes treated as held by beneficiaries https://www.legislation.gov.uk/ukpga/2003/14/schedule/4ZA/paragraph/11/2025-11-17 - FA 2003 Schedule 4ZA para 13 - higher rates for certain trustees buying homes https://www.legislation.gov.uk/ukpga/2003/14/schedule/4ZA/paragraph/13/2025-11-17 - FA 2003 Schedule 16 para 1 - what counts as a bare trust https://www.legislation.gov.uk/ukpga/2003/14/schedule/16/paragraph/1/2025-11-17 - FA 2003 Schedule 16 para 3 - how bare trustees are treated for SDLT https://www.legislation.gov.uk/ukpga/2003/14/schedule/16/paragraph/3/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09835 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 - A trust described as discretionary may still give a beneficiary an enforceable right to occupy a home for life or receive income. The exact trust terms must be read. - A right to use a property, or a pattern of income payments, may not by itself show the required legal entitlement. The trust documents need to establish it. - This page does not determine whether another SDLT charge or relief may also apply to the same purchase. 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: Stamp duty when a company or trust buys a home
Search Land Tax Advice with Google
