Charities Relief: Partial Relief for Joint Purchases with Non-Charities Explained

SDLT charities relief on joint purchases with a non-charity

Partial SDLT charities relief may be available where a charity buys property with a non-charity, usually as tenants in common. The relief does not cover the whole purchase automatically: it is limited to the charity element and only applies if the charity meets the statutory conditions, intends to use its share for qualifying charitable purposes, and no buyer has a tax avoidance purpose.

• Relief can apply where a qualifying charity buys jointly with one or more non-charities, rather than losing relief altogether.
• The main conditions are that the charity is qualifying, acquires its share as tenant in common, intends to hold that share for qualifying charitable purposes, and there is no tax avoidance purpose.
• The amount of relief is capped at the lower of the charity’s ownership share in the property and the proportion of the purchase price funded by the charity.
• For example, if a charity owns 40% of a property but pays only 25% of the price, the maximum relief is 25%.
• Relief can later be withdrawn if the charity stops being established only for charitable purposes or if the property, or a derived interest, stops being used for qualifying charitable purposes.
• In practice, the key checks are who the buyers are, how the property is held, how much the charity owns and pays, the intended charitable use, and whether there is any avoidance risk.

Scroll down for the full analysis.

SDLT charities relief where a charity buys with a non-charity

This page explains a narrow but important part of SDLT charities relief. It deals with cases where a charity is involved in a land purchase, but the buyer is not made up entirely of charities. The rules can still give partial relief, but only if specific conditions are met and the charitable use test is satisfied.

What this rule is about

Ordinary charities relief is aimed at purchases by charities for charitable purposes. The difficulty arises where the land is bought jointly by a charity and a non-charity, or where the structure of the purchase means the charity does not meet the usual full-relief conditions.

The legislation recognises that a mixed purchase should not necessarily lose relief altogether. Instead, it allows partial relief in certain cases. The main idea is that the charity may obtain relief for its part of the transaction, rather than for the whole purchase.

What the official source says

The HMRC manual says that partial relief is available in two broad situations under Finance Act 2003 Schedule 8 paragraphs 3A to 3C:

• where a charity acquires jointly with a non-charity; and
• where a non-charity acquires for charitable purposes.

The material provided here focuses mainly on the first situation: a qualifying charity acquiring a chargeable interest as tenant in common with one or more purchasers who are not qualifying charities.

In that case, partial relief may be available if:

• the charity is a qualifying charity;
• it acquires its interest as tenant in common with one or more non-qualifying purchasers;
• none of the purchasers enters into the transaction for a tax avoidance purpose; and
• the charity intends to hold its undivided share for qualifying charitable purposes.

Where those conditions are met, the relief is limited. It applies to the lower of:

• the proportion of the property held by the qualifying charity or charities; or
• the proportion of the chargeable consideration provided by the qualifying charity or charities.

The source also says that relief, or an appropriate proportion of it, can later be withdrawn if:

• the charity ceases to be established for charitable purposes only; or
• the chargeable interest, or any derived interest, ceases to be used for qualifying charitable purposes.

Finally, the source notes that relief can still be available where a charity is not a qualifying charity, provided it intends to hold the greater part of its interest for qualifying charitable purposes.

What this means in practice

The practical effect is that a mixed purchase does not automatically prevent SDLT charities relief. But the relief is not all-or-nothing. It is ring-fenced to the charity element of the deal, and even then only up to the lower of two measures: the charity’s ownership share or the amount of the price it actually funds.

This matters because ownership percentages and funding percentages are not always the same. A charity may own 50% of a property but contribute only 30% of the purchase price. In that case, the relief is capped by the lower figure, so only 30% is relieved.

The rule also makes the intended use of the charity’s share important. The charity must intend to hold its undivided share for qualifying charitable purposes. If that intention is missing at the time of purchase, the relief should not be available. If the qualifying use later stops, there can be a clawback of all or part of the relief.

The anti-avoidance condition is also central. If any purchaser enters into the transaction with a tax avoidance purpose, the partial relief described here is not available.

How to analyse it

A sensible way to approach this issue is to work through the following questions.

• Who are the purchasers? Identify which buyers are qualifying charities and which are not.
• How is the property being held? The source refers specifically to acquisition as tenants in common.
• What share does the charity hold? Work out the charity’s undivided share of the property.
• Who is funding the purchase? Work out what proportion of the chargeable consideration is provided by the charity or charities.
• What is the charity’s intended use? Check whether the charity intends to hold its share for qualifying charitable purposes.
• Is there any tax avoidance purpose? The relief depends on the absence of such a purpose among all purchasers.
• Could the relief later be withdrawn? Consider whether there is any realistic risk that the property, or a derived interest, might stop being used for qualifying charitable purposes.

After that, compare the charity’s ownership proportion with its funding proportion. The lower of the two is the maximum proportion to which relief can apply under the rule described in the source.

Example

Illustration: a charity and a commercial partner buy a property together as tenants in common. The charity takes a 40% share, and the commercial partner takes a 60% share. The charity contributes 25% of the purchase price, with the rest coming from the commercial partner. The charity intends to use its share for qualifying charitable purposes, and there is no tax avoidance purpose.

On the basis of the rule in the source, partial relief may be available, but it is capped at the lower of the two relevant proportions. Here, that is 25%, because the charity funded 25% of the consideration even though it holds 40% of the property.

Why this can be difficult in practice

There are several points that can be fact-sensitive.

First, the rule depends on the charity’s intention at the time of acquisition. Intention can be straightforward where the planned use is documented, but harder where the future use is mixed, staged, or still developing.

Second, the source refers to qualifying charitable purposes and, in one place, to a charity that is not a qualifying charity but intends to hold the greater part of its interest for qualifying charitable purposes. That means the precise statutory conditions matter, and the result may depend on how the charity is constituted and how the property will actually be used.

Third, the cap based on the lower of ownership share and funding share means the economic arrangements between the purchasers matter. In joint acquisitions, those arrangements are not always obvious from the transfer document alone.

Fourth, relief can be withdrawn later. That means the SDLT position is not always settled once the return is filed. A later change in the charity’s status or use of the property can affect the relief already claimed.

Finally, the anti-avoidance condition is expressed broadly in the source. Whether a transaction has a tax avoidance purpose can depend on the overall arrangement, not just on the stated commercial objective.

Key takeaways

• A charity can still obtain partial SDLT relief when buying with a non-charity, but only if the statutory conditions are met.
• The amount relieved is capped by the lower of the charity’s ownership share and the proportion of the price it actually provides.
• The relief can be lost later if the charitable status or qualifying charitable use condition stops being satisfied.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Charities Relief: Partial Relief for Joint Purchases with Non-Charities Explained

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