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

Introduction

A common question in property tax planning is whether a landlord can transfer a buy-to-let property from personal ownership into a limited company, delay payment of the resulting Stamp Duty Land Tax (SDLT), and then raise finance to pay that SDLT bill later.

People usually ask this because they want to buy a new main residence without paying the higher rates of SDLT that can apply when they already own another dwelling. One idea sometimes suggested is to move the existing investment property into a company first, then deal with the SDLT on that transfer afterwards.

The short answer is that lenders may, in principle, allow borrowing or a remortgage where the funds are being used to meet a tax liability. But the tax position needs careful handling, because SDLT on a land transaction is not generally something a buyer can simply leave unpaid for up to 12 months with only a small fixed penalty.

The Question

The scenario is this: an individual owns an investment property personally and wants to buy a new home. To avoid the higher rates of SDLT applying to the new home purchase, the individual is considering transferring the investment property into a limited company before buying the new home. That transfer itself may trigger SDLT. The question is whether the SDLT on the transfer can be paid later, potentially using mortgage finance or a remortgage, and whether lenders are likely to allow that.

Nick’s Explanation

Nick’s enquiry to a mortgage contact was whether there are lenders who will permit a remortgage on a property where the purpose of the borrowing is to pay an SDLT liability arising on a transfer of an investment property into a company.

The response he received, in anonymised form, was that this is “definitely in theory” a scenario that many lenders are able to consider. That suggests the financing idea is not impossible from a lending perspective.

However, the tax side is the more important part. Even if a lender is willing to consider the loan purpose, that does not change when SDLT becomes due, what filing obligations apply, or whether the transfer into the company actually achieves the intended SDLT result on the later purchase of a new home.

The Law

SDLT is charged under the Finance Act 2003 on land transactions in England and Northern Ireland. A transfer of a residential property from an individual to a limited company is normally a chargeable transaction, even if the individual owns the company.

Where a company acquires a dwelling, the higher rates for additional dwellings are often in point. Broadly, a company buying a residential property usually pays SDLT at the higher residential rates unless a specific relief applies.

The effective date of the transaction is usually the completion date. SDLT must then be reported to HMRC, and any tax due must be paid, by the filing deadline set by the legislation in force at the time. In modern practice, SDLT filing and payment are generally required within 14 days of the effective date of the transaction.

If SDLT is filed late or paid late, penalties and interest may arise. The idea that a taxpayer can simply wait up to 12 months and face only a maximum £200 penalty is not a safe statement of the current SDLT rules. Delay can lead to filing penalties, late payment interest, and potentially further consequences depending on the length of the delay.

On the later purchase of a new main residence, the higher rates question depends on the buyer’s circumstances at the effective date of that purchase. If the buyer no longer owns another dwelling at that time, the higher rates may not apply. But the detailed outcome depends on the exact facts, including timing, beneficial ownership, and whether any dwellings are still retained directly or indirectly.

Analysis

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

First, on finance, a lender may be willing to lend where the purpose is to discharge a tax liability. Whether that is possible depends on normal lending criteria such as equity, affordability, rental cover, company structure, security, and the lender’s rules on capital raising. So the answer to “can this be financed?” is often yes in principle, but only subject to underwriting and product suitability.

Second, on tax, transferring a personally owned investment property into a company is usually itself an SDLT event. In many cases the company is treated as giving chargeable consideration either because it assumes debt or because market value rules can apply in connected-party situations. That means the transfer may create a significant SDLT liability immediately.

The next question is timing. If the transfer completes before the purchase of the new home, and the individual genuinely ceases to own the investment property personally before buying the new home, that may help on the higher rates analysis for the new home purchase. But this should not be treated as automatic. The structure must be legally completed, beneficial ownership must really have changed, and all related tax issues need checking.

Another practical point is that the remortgage or capital raise may not be available quickly enough to solve the SDLT payment deadline. SDLT is due shortly after completion, whereas a refinance can take longer. So even if lenders are open to the idea, the taxpayer still needs a realistic plan to fund the SDLT on time.

There may also be other taxes in play. A transfer into a company can raise capital gains tax issues for the individual, and incorporation relief is not automatically available. Mortgage consent, legal work, valuation issues and company borrowing terms can also materially affect whether the arrangement is worthwhile.

If any part of the planning depends on a property being uninhabitable or not suitable for use as a dwelling, it is important to note that the threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. Minor defects, disrepair, or the need for improvement works will often not be enough.

Outcome

A lender may be prepared to consider a remortgage or capital raise to pay an SDLT liability arising from the transfer of a property into a limited company.

But that does not mean the SDLT can safely be left unpaid for many months. As a tax matter, SDLT on the transfer is generally due shortly after completion, and late filing or late payment can trigger penalties and interest.

So the practical answer is: yes, finance may be possible in principle, but the SDLT timetable still needs to be met, and the underlying tax planning should be checked carefully before any transfer is carried out.

Practical Steps

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

• work out whether the transfer to the company will trigger SDLT, and on what value or consideration;
• check whether any mortgage debt on the property affects the SDLT calculation;
• confirm the SDLT filing and payment deadline that will apply to the transaction;
• ask a broker whether a remortgage or capital raise for tax payment is acceptable to lenders in your circumstances;
• make sure the finance can complete in time to meet the SDLT payment date;
• review capital gains tax and any possible incorporation relief before transferring the property;
• check whether the transfer actually removes the higher rates issue on the later home purchase, based on the exact completion dates and ownership position.

Conclusion

It may be possible to remortgage or raise funds to pay an SDLT bill after transferring a rental property into a limited company, and lenders may be open to that in principle. The key point, however, is that SDLT is still usually payable shortly after completion of the transfer. The tax cannot be treated as something that can simply sit unpaid for up to 12 months with only a minor fixed penalty.

Legal References Used

• Finance Act 2003
• SDLT higher rates for additional dwellings provisions within Finance Act 2003
• 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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