Can you remortgage a property to pay an SDLT bill after transferring it into a company?

Introduction

A common question in property tax planning is whether a landlord can move a buy-to-let property from personal ownership into a limited company before buying a new home, and then use mortgage finance to pay the SDLT that arises on the transfer. People usually ask this because they want to avoid the higher rates of SDLT on their intended home purchase.

The short answer is that mortgage funding for this kind of SDLT liability may be possible in principle, but the tax position needs careful thought. In particular, the assumption that the SDLT can simply be left unpaid for up to 12 months with only a small fixed penalty is not a safe way to approach the issue.

The Question

The scenario can be stated in general terms like this:

An individual owns an investment property personally. They now want to buy a new main residence. They are concerned that, if they still own the investment property at the time they buy the new home, the higher rates for additional dwellings may apply to that purchase.

They are therefore considering transferring the investment property into a limited company before buying the new home. That transfer itself may trigger SDLT. The practical question is whether a lender may allow a remortgage or other secured borrowing so that the SDLT on the transfer into the company can be funded from borrowing rather than cash.

Nick’s Explanation

Nick’s original enquiry to a finance contact was, in substance, whether lenders would allow a remortgage on a property to pay an SDLT liability arising when an investment property is transferred into a limited company.

The response he received was that this was “definitely in theory” a scenario that a number of lenders could consider. That means the funding point is not impossible as a matter of lending practice. Some lenders may be willing to consider borrowing where the purpose is connected with restructuring a property holding, including raising funds against property to meet tax liabilities.

However, the useful point from Nick’s enquiry is really a practical one: finance may exist, but that does not answer whether the tax plan works, whether the SDLT analysis is correct, or whether the timing assumptions are sound.

The Law

SDLT on land transactions is charged under the Finance Act 2003. Where a person transfers a residential investment property to a company, that transfer is usually a chargeable land transaction for SDLT purposes.

If the company gives consideration, including taking subject to debt or assuming mortgage liabilities, SDLT may be payable by the company on the chargeable consideration. In some cases, especially where the transfer is between connected persons, market value rules may also need to be considered depending on the structure and the tax in point.

The higher rates for additional dwellings are governed by Schedule 4ZA to the Finance Act 2003. Broadly, if an individual buys a dwelling and, at the end of the day of purchase, owns another dwelling and is not replacing their only or main residence, the higher rates may apply.

A transfer of an investment property into a company before buying a new home may remove that personally owned additional dwelling from the individual’s own balance sheet. But whether that changes the higher-rates outcome depends entirely on the exact facts, timing, beneficial ownership, and whether any other dwellings are owned by the buyer or a spouse or civil partner.

As for payment timing, SDLT returns and payment are generally due within 14 days of the effective date of the transaction. Late filing and late payment can lead to penalties and interest. It is not correct to treat SDLT as something that can ordinarily be left for 12 months for only a modest fixed penalty.

Analysis

There are really two separate issues here: tax and finance.

First, on the tax side, transferring a personally owned rental property into a company is usually not tax-neutral. SDLT commonly arises in the company, and other taxes may also need to be reviewed, including capital gains tax and, where relevant, financing and income tax consequences. So the transfer may solve one SDLT concern while creating another SDLT charge immediately.

Second, on the higher-rates point, the person is trying to ensure that when they buy their new home they no longer personally own the investment property. That may help in some cases, but it is not a universal solution. The higher-rates rules are fact-sensitive. For example:

• the buyer may own other dwellings;
• a spouse or civil partner’s property interests may be attributed for SDLT purposes;
• the timing of exchange, completion and the effective date matters;
• the new purchase may or may not qualify as a replacement of a main residence.

Third, on the funding side, it appears that some lenders may consider a remortgage or related borrowing where funds are needed to meet an SDLT liability arising from a transfer into a company. But that is a lending-policy question, not a tax rule. Lenders will usually look at matters such as:

• whether the borrowing is regulated or unregulated;
• loan-to-value ratios;
• rental cover and affordability;
• whether the property is already mortgaged;
• whether the borrower or company meets underwriting criteria;
• the purpose of funds and documentary evidence.

Fourth, the payment timing needs correcting. SDLT is normally due much sooner than 12 months after the transfer. A person considering this route should assume that the SDLT return and payment deadline will be tight. If the plan depends on delayed payment, it is likely to be flawed from the outset.

Finally, if part of the thinking is that the property is in such poor condition that SDLT treatment might be different, readers should be cautious. In uninhabitable or not suitable for use cases, the condition thresholds are now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. Ordinary disrepair, dated condition, or the need for refurbishment will often not be enough.

Outcome

A remortgage or similar borrowing to fund an SDLT liability after transferring a property into a company may be possible in principle, because some lenders may consider it. But that does not mean the underlying SDLT strategy is automatically effective or low-risk.

The practical conclusion is this:

• yes, funding may be available in some cases;
• the transfer into a company will often create its own SDLT charge;
• the higher-rates position on the later home purchase must be checked carefully on the actual facts;
• SDLT cannot safely be treated as payable up to 12 months later with only a small penalty.

Practical Steps

If you are assessing this kind of arrangement, the sensible next steps are:

1. Map the ownership position in detail, including all dwellings owned by the buyer and, if relevant, a spouse or civil partner.
2. Confirm whether the intended home purchase would be a replacement of a main residence under Schedule 4ZA Finance Act 2003.
3. Calculate the SDLT on the transfer into the company before doing anything else.
4. Check whether any mortgage debt is being assumed or refinanced, as this often affects chargeable consideration.
5. Review any capital gains tax and wider tax consequences of the incorporation or transfer.
6. Speak to a mortgage broker or lender about whether capital raising for the SDLT liability is acceptable under current lending policy.
7. Do not rely on delayed SDLT payment as the funding plan; work on the basis that filing and payment deadlines will apply promptly after completion.
8. If arguing that a property is not suitable for use as a dwelling, test that position against the stricter approach confirmed in Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

Conclusion

It may be possible to raise mortgage finance to pay SDLT arising on a transfer of a rental property into a company, but the real issue is whether the overall SDLT plan stands up. The transfer usually creates its own tax charge, the higher-rates rules need a careful fact-based review, and SDLT payment deadlines should not be underestimated.

Legal References Used

• Finance Act 2003
• Finance Act 2003, Schedule 4ZA
• Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799

This page was last updated on 22 March 2026.

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