When fund and REIT companies skip part of the non-resident SDLT test
In brief
PAIFs, qualifying PAIF subsidiaries, company UK REITs and group UK REIT members do not have to meet the second company residence condition in the non-resident SDLT rules.
- This is not a complete exemption from the non-resident SDLT increase.
- The company must meet the relevant legal definition.
- The remaining non-resident tests still apply.
Scroll down for the full analysis.
Read the original guidance here:
When fund and REIT companies skip part of the non-resident SDLT test
When fund and REIT companies skip part of the non-resident SDLT test
Some investment fund and REIT companies need not meet one residence test for the 2% non-resident stamp duty land tax increase. That alone does not remove the increase. Other parts of the test still matter.
What this rule is about
An extra SDLT rate can apply when a company buys property in a transaction that is non-resident, subject to the company residence conditions set by the law. This page concerns only the second one.
The exception is narrow: although it removes that second condition for listed companies, it does not mean every purchase by them avoids the non-resident increase.
What the official source says
HMRC’s manual states that paragraph 7(3) of Schedule 9A does not apply to four types of company. The legislation sets out the same categories. This excludes one part of the company test.
- PAIFs, or Property Authorised Investment Funds.
- Companies that are 51% subsidiaries of a PAIF.
- Company UK Real Estate Investment Trusts, or company UK REITs.
- Companies that belong to a group UK REIT.
Each label has a specific legal meaning. Labels alone do not allow a company to rely on the rule simply because it invests in property.
What this means in practice
If your solicitor has raised the non-resident SDLT increase, first establish the type of company buying. If it qualifies as a PAIF or REIT company, it skips the second residence condition. This is not an all-purpose SDLT exemption.
- Finding that the buyer is a PAIF or REIT is not the end of the analysis.
- Check whether the buyer fits the legal definition of that category.
- Where the buyer is said to be a PAIF subsidiary, check group ownership.
- Work through the remaining non-resident transaction tests.
How to analyse it
Begin with the buyer’s formal status rather than its trading name. The answer can depend on fund status, ownership links, and whether the REIT is a company itself or part of a group.
- Identify the company that is buying the property.
- Ask whether it is a PAIF under the statutory definition.
- If it is a subsidiary, test the 51% subsidiary definition.
- Ask whether it is a company UK REIT.
- If not, ask whether it is a member of a group UK REIT.
- Then apply the rest of the non-resident SDLT test.
Example
Harbour Property Ltd buys a building and, because it is a 51% subsidiary of a PAIF under the relevant tax definition, does not need to meet the second residence condition. The other conditions for the non-resident SDLT increase must still be checked.
Change one fact. If Harbour is merely part of a wider property investment group, without the required PAIF link, this exclusion may not apply.
Why this can be difficult in practice
Names can be misleading. A business may call itself a property fund, yet not be a PAIF. That distinction can decide the SDLT result.
- Marketing descriptions do not prove PAIF status.
- Majority ownership does not automatically make a company a 51% subsidiary for this rule.
- Company UK REIT and group UK REIT are separate categories.
- Records should support the status claimed at the time of the purchase.
- HMRC’s manual is guidance, not the law; the legislation controls.
Key takeaways
- Four listed fund and REIT company categories skip one residence condition.
- The exclusion does not automatically remove the 2% non-resident SDLT increase.
- Formal tax status and group structure are the key facts.
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 section 75ZA — adds two percentage points for non-resident transactions
- FA 2003 Schedule 9A para 7 — sets the second company residence condition
- FA 2003 Schedule 9A para 11 — excludes specified funds and REIT companies
- FA 2003 Schedule 7A para 2 — defines a property authorised investment fund
- Corporation Tax Act 2010 Part 24 Chapter 3 — defines when a company is a 51% subsidiary (could not parse a provision)
- an Act of 2010 we do not have an identifier for section 523 — defines a group UK real estate investment trust (no link: an Act of 2010 we do not have an identifier for)
- an Act of 2010 we do not have an identifier for section 524 — defines a company UK real estate investment trust (no link: an Act of 2010 we do not have an identifier for)
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 a company has the required fund, subsidiary or REIT status can depend on its formal structure and tax status.
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.
- Documents confirming PAIF or REIT status.
- Group structure records where the company relies on subsidiary or group REIT status.
- Information needed to apply the rest of the non-resident transaction test.
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 When fund and REIT companies skip part of the non-resident SDLT test [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 section 75ZA - adds two percentage points for non-resident transactions https://www.legislation.gov.uk/ukpga/2003/14/section/75ZA/2025-11-17 - FA 2003 Schedule 9A para 7 - sets the second company residence condition https://www.legislation.gov.uk/ukpga/2003/14/schedule/9A/paragraph/7/2025-11-17 - FA 2003 Schedule 9A para 11 - excludes specified funds and REIT companies https://www.legislation.gov.uk/ukpga/2003/14/schedule/9A/paragraph/11/2025-11-17 - FA 2003 Schedule 7A para 2 - defines a property authorised investment fund https://www.legislation.gov.uk/ukpga/2003/14/schedule/7A/paragraph/2/2025-11-17 - an Act of 2010 we do not have an identifier for section 523 - defines a group UK real estate investment trust - an Act of 2010 we do not have an identifier for section 524 - defines a company UK real estate investment trust Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09930 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 a company has the required fund, subsidiary or REIT status can depend on its formal structure and tax status. 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: When fund and REIT companies skip part of the non-resident SDLT test
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