Choosing the right SDLT property-type code
Choosing an SDLT property-type code
HMRC expects one code for the whole property in the purchase. The answer can be residential, mixed, non-residential or additional property.
- Check all land, buildings and rights included.
- Mixed property includes both residential and non-residential parts.
- HMRC guidance does not replace the detailed statutory tests.
Scroll down for the full analysis.
Read the original guidance here:
Choosing the right SDLT property-type code
When completing an SDLT return, you must choose a property code that describes everything bought under the transaction, rather than simply calling the place a house. The code matters. A home bought with farmland, business buildings or a separate cottage may instead require the mixed code. That answer can affect your stamp duty position.
What this rule is about
On form SDLT1 and SDLT3, HMRC asks at question 1 for a property-type code that identifies the full property covered by the transaction. SDLT4 asks at question 8. There are four possible answers: 01, 02, 03 and 04.
The essential point is to consider the whole purchase. On completion day, check every building, field, yard, right of way and piece of land included.
This may sound like form filling. It is more than that.
The law distinguishes property that is wholly residential from property containing a non-residential part. Section 55 applies different tax tables to those categories. Section 116 provides the legal meaning of residential property.
What the official source says
HMRC’s manual requires one code to be selected for the entire property covered by the transaction. The manual is HMRC guidance rather than the law. Even so, it sets out the answer HMRC expects on these forms.
Code 01 is for residential property.
Code 02 is for mixed property, where only part is residential.
Code 03 is for property that is wholly non-residential.
Code 04 is for a residential purchase treated as an additional property under HMRC’s form guidance.
For code 01, HMRC refers to section 116. It covers a building used, suitable or being prepared for use as a home, together with its garden or grounds and rights benefiting it, including an access right. Those rights can matter.
Property outside that definition is non-residential. A purchase containing both kinds is mixed.
HMRC gives a farmhouse sold with farm buildings, farmland and a worker’s cottage as an example of mixed property. It is mixed.
Do not look only at the building where you plan to live.
Do not assume one title means one type of property.
Linked purchases may also need to be considered together.
HMRC says a single purchase of six or more separate homes should normally be shown as code 03, subject to its stated multiple dwellings relief qualification.
Code 04 requires particular care. HMRC says it should be used when buying residential property leaves an individual owning more than one residential property, or when a company or other non-individual buys residential property. The form guidance is brief.
The higher-rate rules contain more detail than that short form instruction. Owning another home matters, but it is not the only legal question. For example, the law includes rules on replacing your main home.
What this means in practice
Begin with the land and rights in the legal documents rather than the estate agent’s description. “House with land” is not an SDLT answer. Neither is “farmhouse” or “business premises”.
Where any part has its own non-residential character, code 02 may be the correct answer. That can include land or buildings, rather than only an active business.
List each plot and building included in the sale.
Check how each part was used on completion day.
Check whether someone else had rights to use it.
Consider whether land formed the home’s garden or grounds.
Keep records that support the answer on the return.
Paper returns involve an additional step. HMRC says that where SDLT1 question 1 is code 02 or 03, SDLT4 must also be completed to identify the use or uses of the non-residential parts. Online filing software asks related questions instead.
For a lease, question 16 on SDLT1 uses letters rather than numbers: R for residential, N for non-residential and M for mixed. HMRC says that letter must match the property type selected at question 1.
How to analyse it
Put the questions in this order. Labels offer little help. The land itself, its features and its use carry much more weight.
What land, buildings and rights does the contract transfer?
Is there a building used or suitable for use as a home?
Which land is genuinely part of that home’s garden or grounds?
Does any building, parcel or right have a separate non-residential role?
Are there linked purchases that form one arrangement?
Is the buyer an individual, company or other organisation?
Will the purchase leave an individual owning another home?
If it is a lease, does the question 16 letter match the underlying type?
What determines whether a field is grounds? Its name, acreage or any single fact does not decide it. Consider the whole picture: location, access, boundaries, use, control and the field’s connection with the home.
Example
Amira buys a farmhouse for £650,000. The transfer includes two farm sheds, fields used under a grazing agreement and a cottage occupied by a farm worker. Although Amira will live in the farmhouse, HMRC’s manual treats this kind of sale as mixed. The SDLT1 answer should therefore be code 02, and a paper filing also needs SDLT4.
One changed fact may produce a different answer. If the transfer covered only the farmhouse and its ordinary garden, there may be no non-residential part. The point is decided by the documents and facts at completion.
Why this can be difficult in practice
Land around a home often creates borderline cases. In one case, a paddock may form part of the grounds; in another, it may be separate land. Describing it as a garden, or using it occasionally, does not resolve the issue.
This is where people go wrong: later changes do not alter what was bought. A new business use after completion may evidence earlier facts, but it does not automatically change the property type at completion.
Separate titles can matter, but they do not settle the answer alone.
Business rates and council tax are useful evidence, not final answers.
A commercial activity does not automatically make all nearby land non-residential.
Land without a business use does not automatically count as grounds.
The code on the return does not remove the need to apply the detailed higher-rate rules.
Key takeaways
Choose the code for everything included in the purchase.
A home bought with separate non-residential land or buildings may be mixed.
Keep plans, agreements and dated evidence that support the answer.
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 55 — tax tables for residential and mixed property
- FA 2003 section 108 — when separate purchases count as linked
- FA 2003 section 116 — what counts as residential property
- FA 2003 Schedule 4ZA para 3 — higher-rate test for one home purchase
- FA 2003 Schedule 4ZA para 4A — higher-rate test for company home purchases (provision not found on legislation.gov.uk)
- FA 2003 Schedule 4ZA para 7 — higher-rate test for company multi-home purchases
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 land is garden or grounds, or has a separate non-residential role, depends on the whole factual picture.
- The manual does not give a date for its statement about multiple dwellings relief, so the law in force on the transaction date must be checked.
- The manual says the lease code must match the SDLT1 property type, but does not explain in this passage how code 04 maps to the lease letter.
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.
- Land Registry title and filed plan for every parcel — exactly what land and rights were bought
- Contract, transfer, lease and completion statement — the legal property included in the completed purchase
- Sales brochure, dated photographs and marketing emails — how the property and each part were presented at the time
- Dated aerial photographs and historic maps — layout, boundaries, access and the relationship between land and home
- Planning permissions, conditions and planning history — permitted uses and any limits on use
- Room-by-room record of use at completion — whether buildings or rooms were used as a home or for another purpose
- Council tax and business rates records — official rating treatment, which is evidence but not conclusive
- Grazing, farming, forestry or storage agreements — whether land had a real separate use or third-party occupation
- Rights of way, easements, leases and licences — who could use the land and whether it benefited the home
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 Choosing the right SDLT property-type code [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 55 - tax tables for residential and mixed property https://www.legislation.gov.uk/ukpga/2003/14/section/55/2025-11-17 - FA 2003 section 108 - when separate purchases count as linked https://www.legislation.gov.uk/ukpga/2003/14/section/108/2025-11-17 - FA 2003 section 116 - what counts as residential property https://www.legislation.gov.uk/ukpga/2003/14/section/116/2025-11-17 - FA 2003 Schedule 4ZA para 3 - higher-rate test for one home purchase https://www.legislation.gov.uk/ukpga/2003/14/schedule/4ZA/paragraph/3/2025-11-17 - FA 2003 Schedule 4ZA para 4A - higher-rate test for company home purchases https://www.legislation.gov.uk/ukpga/2003/14/schedule/4ZA/paragraph/4A/2025-11-17 - FA 2003 Schedule 4ZA para 7 - higher-rate test for company multi-home purchases https://www.legislation.gov.uk/ukpga/2003/14/schedule/4ZA/paragraph/7/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm62040 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 land is garden or grounds, or has a separate non-residential role, depends on the whole factual picture. - The manual does not give a date for its statement about multiple dwellings relief, so the law in force on the transaction date must be checked. - The manual says the lease code must match the SDLT1 property type, but does not explain in this passage how code 04 maps to the lease letter. 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 1 September 2026
Useful article? You may find it helpful to read the original guidance here: Choosing the right SDLT property-type code
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