Is there any SDLT relief when buying a probate property through a company or transferring your home into a limited company?

Introduction

People often search for SDLT reliefs when they are buying a run-down property, especially where the property came from an estate, needs major works, or is being bought through a limited company. They may also wonder whether moving their own home into a company can reduce tax or create a better investment structure.

The short answer is that there is usually no special SDLT relief simply because a property is inherited by the seller, in poor condition, or being bought for investment. Company purchases of residential property usually attract the higher SDLT rates, and a transfer of a home into a connected company is usually charged by reference to market value. The main area that sometimes changes the SDLT result is whether the property is genuinely not suitable for use as a dwelling at completion, but the legal threshold for that argument is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

The Question

A homeowner was planning to sell their current home and use the funds to buy an investment property for about £700,000 through a limited company. The property being bought had been inherited by the sellers and had been left empty for some time. It was described as dated and in poor condition, with proposed works including repairs to the roof and masonry and replacement of the kitchen and bathroom.

The homeowner was also considering a second step: transferring their existing home into a limited company, refinancing it, and then letting it out. They wanted to know whether any SDLT reliefs or exemptions might apply either to the company purchase of the investment property or to the transfer of their own home into the company.

Nick’s Explanation

Nick’s core point was that there is no general SDLT relief just because:

• the property is being sold by beneficiaries of a deceased estate,
• the property is old, dated, or in need of repair, or
• the buyer is using a limited company.

He explained that where a company buys residential property, the higher residential SDLT rates normally apply. He also noted that if a person transfers their own home to a company they control, SDLT is generally calculated by reference to the property’s market value rather than any lower stated price.

Nick also identified the one point that may materially alter the SDLT position: whether the purchased property is truly not suitable for use as a dwelling on the effective date of the transaction. In anonymised form, his reasoning was:

“A property needing ordinary repair or modernisation will usually still be residential for SDLT. The argument for non-residential treatment only arises where the condition is so poor that the building is genuinely unsuitable for habitation at completion.”

He further explained that if the property were correctly treated as non-residential, the SDLT charge could be much lower than under the higher residential company rates. But he also warned that this is a disputed area and one that HMRC may challenge.

The Law

The main SDLT rules here are found in the Finance Act 2003.

• Section 42 and related charging provisions establish that SDLT is charged on land transactions.
• Section 53 FA 2003 applies market value rules in certain connected company transactions, including cases where a person transfers property to a company with which they are connected.
• Section 55 FA 2003 sets the rate structure for SDLT, including the residential and non-residential rate tables.
• Schedule 4ZA FA 2003 imposes the higher rates for additional dwellings, which in practice generally apply to company purchases of residential property.
• Section 116 FA 2003 defines “residential property”, including property that is used or suitable for use as a dwelling.

For company purchases, the important point is that a company buying residential property does not get the ordinary treatment available to some individual buyers. Broadly, a company acquiring a dwelling pays the higher residential rates unless the property is not residential for SDLT purposes.

For transfers of a home into a connected company, SDLT is not avoided by transferring at undervalue. The market value rule can apply, so the tax calculation is based on the property’s true market value at the time of transfer.

On property condition, the key legal question is whether the building is “suitable for use as a dwelling” at the effective date of the transaction. That issue has been heavily litigated. The current position is stricter than many buyers assume. In an uninhabitable or not suitable for use case, the condition thresholds are now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

Analysis

It helps to separate the scenario into two transactions.

First, the company purchase of the investment property.

If the property is residential at completion, the buyer is a company and the higher residential SDLT rates will normally apply. A purchase price of around £700,000 can therefore produce a substantial SDLT charge. The fact that the sellers inherited the property does not create a relief. Probate on the seller’s side does not change the SDLT analysis for the buyer.

The fact that the property is dated also does not help. A worn-out kitchen, old bathroom, tired decoration, or a need for refurbishment will not normally take the property outside the residential rules. Even fairly significant repairs may still leave the property “suitable for use as a dwelling”.

The only realistic route to a lower SDLT charge is if the property was, at completion, so defective that it was not suitable for use as a dwelling. That is a fact-sensitive test. Evidence may include structural reports, photographs, survey findings, utility condition, water ingress, dangerous defects, legal occupation issues, or the absence of essential facilities. But after Mudan, the threshold is relatively high. The courts have shown that a property can be in poor shape and still remain residential for SDLT.

Secondly, the transfer of the existing home into the buyer’s own company.

That is not usually an SDLT-free restructuring. If the company is connected to the individual transferor, the market value rule under section 53 FA 2003 can apply. So even if the transfer is made for little or no consideration, SDLT may still be charged by reference to the home’s market value. If the property is residential, the company will usually be within the higher residential rates on that market value figure.

In practical terms, that means a person can face SDLT twice in a broader strategy of this kind:

• once on the company’s purchase of the investment property, and
• again on the transfer of the existing home into the company.

There is no general incorporation relief for SDLT just because a person wants to hold rental property through a company. Relief may exist in some partnership situations, but nothing in the facts here suggests that the ordinary partnership rules would assist.

As for rough figures, if the £700,000 purchase is residential and subject to the higher company rates, the SDLT is much higher than if the property qualifies as non-residential. If, and only if, the property is correctly treated as non-residential, the SDLT is charged under the non-residential rate table in section 55 FA 2003, Table B, which can reduce the liability significantly.

Outcome

The practical conclusion is usually as follows:

• There is no special SDLT relief because the property is a probate sale.
• There is no special SDLT relief just because the property is in poor or dated condition.
• A limited company buying a residential property will usually pay the higher residential SDLT rates.
• Transferring your own home into a company you control will usually trigger SDLT on market value, again often at the higher residential company rates.
• The only potentially significant reduction for the purchase is if the property is genuinely not suitable for use as a dwelling at completion, but that argument now faces a relatively high threshold after Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

Practical Steps

If you are assessing a similar SDLT position, the sensible next steps are:

1. Identify each proposed transaction separately. A company purchase and a later transfer of a home into the company are distinct SDLT events.
2. Confirm whether the property being bought is residential or arguably non-residential on the completion date. Focus on actual condition at that date, not on future renovation plans.
3. Gather evidence if non-residential treatment is being considered. This may include a full survey, structural engineer’s report, dated photographs, contractor reports, and evidence of any health and safety or legal occupation issues.
4. Check the SDLT calculation under both possible classifications so you understand the tax difference.
5. For any transfer to a connected company, obtain a reliable market valuation because market value may be the SDLT base.
6. Consider the wider tax position as well, including capital gains tax, mortgage issues, refinancing, and any income tax or corporation tax consequences of moving property into a company structure.
7. If the “not suitable for use as a dwelling” point is being relied on, make sure the position is reviewed carefully in light of Mudan and the current HMRC approach.

Conclusion

Buying a run-down probate property through a company does not, by itself, create an SDLT relief. Nor does transferring your own home into a company usually avoid SDLT. In most cases, residential company rates apply, and a connected-party transfer into a company is charged on market value. The only major exception worth examining is whether the purchased property was truly not suitable for use as a dwelling at completion, but that is now a harder argument to sustain than many buyers expect.

Legal References Used

• Finance Act 2003, section 53
• Finance Act 2003, section 55
• Finance Act 2003, section 116
• 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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