Does SDLT at Non-Residential Rates Apply When You Transfer 6 Apartments to Your Own Limited Company?

Introduction

A common question in property tax is whether the purchase of six or more dwellings qualifies for the lower non-residential rates of Stamp Duty Land Tax (SDLT). This is often called the “rule of six”. The issue becomes especially important where an individual wants to transfer several flats or apartments held personally into a company they control.

The short answer is that, if six dwellings are transferred in a single linked transaction, the transaction is generally treated as non-residential or mixed for SDLT rate purposes. That usually means the non-residential SDLT rates apply rather than the higher residential rates. However, where the buyer is a connected company, there are other points to check as well, including market value rules and whether any partnership incorporation relief may be available.

The Question

A property owner holds six apartments in their personal name and wants to transfer all six to a limited company of which they are a director and shareholder. The question is whether that transfer qualifies for SDLT at the non-residential rates under the rule that applies to purchases of six or more dwellings.

Nick’s Explanation

Nick’s core view was that if six apartments are transferred as part of a single transaction to the company, non-residential SDLT rates apply.

He also raised an important follow-up point: whether the properties are in fact part of a genuine property partnership. In anonymised form, his explanation was:

“If you are transferring six apartments as part of a single transaction to your limited company, non-residential stamp duty rates will apply. It is also worth asking whether the properties are part of a trading partnership. If they are held personally, but profits and expenses are dealt with through a partnership, there may be an exemption or relief on a transfer to a limited company.”

That is a sensible summary. The six-or-more rule can move the transaction into the non-residential SDLT rate table, but if there is a genuine partnership business, the partnership incorporation rules may also need to be considered.

The Law

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

For SDLT purposes, a transaction involving six or more dwellings is not automatically taxed under the ordinary residential rate table. The legislation allows a purchaser of six or more dwellings in a single transaction, or in linked transactions, to be taxed using the non-residential rate rules instead of the residential rules.

Key provisions include:

• Finance Act 2003, section 55, which sets the SDLT rate rules
• Finance Act 2003, section 116, which defines “dwelling”
• The linked transaction rules in Finance Act 2003, section 108

Where the buyer is a company connected with the seller, another important rule is that SDLT is usually calculated by reference to market value rather than the actual consideration paid. That is because transfers between connected persons are subject to special market value rules.

There may also be special rules where property is transferred from a partnership to a company. In some cases, the partnership provisions in Schedule 15 to Finance Act 2003 can reduce or eliminate the SDLT charge, but this depends on the true legal and factual position. Simply owning properties personally is not enough. There must be a genuine partnership arrangement that is recognised for SDLT purposes.

Analysis

The position can be analysed in stages.

First, are there six dwellings?

If all six apartments are separate dwellings for SDLT purposes, the six-or-more rule is potentially engaged. A dwelling usually means a building or part of a building that is suitable for use as a single dwelling. In “not suitable for use” cases, the threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. That case confirms that a property will not fall outside the dwelling definition merely because it needs repair or modernisation. The condition must be serious enough to prevent it from being suitable for use as a dwelling.

Second, is this one transaction or a set of linked transactions?

If all six apartments are transferred together, or under arrangements that make them linked transactions, SDLT is assessed on that basis. If six dwellings are acquired in one transaction or linked transactions, the purchaser can fall within the non-residential rate treatment.

Third, does the fact that the buyer is the owner’s own company prevent the six-or-more rule from applying?

No. The fact that the buyer is a company connected with the seller does not by itself stop the six-or-more rule from applying. If the subject matter of the transaction is six dwellings, the rate treatment can still be non-residential.

Fourth, what amount is SDLT charged on?

This is where many connected-party transfers become more complicated. If a person transfers property to their own company, SDLT is often charged on the market value of the properties, not simply on any nominal price stated in the transfer. So even if the rate is the non-residential rate, the tax base may still be substantial.

Fifth, is there a partnership incorporation angle?

If the properties are genuinely owned and operated as partnership assets, and the transfer is from that partnership into a company, Schedule 15 may apply. In some cases, this can significantly reduce SDLT or produce no SDLT charge at all. But HMRC and the courts look at substance, not labels. Relevant factors include whether there is a real partnership agreement, whether profits and losses are shared, whether accounts and tax returns reflect a partnership, and whether the business is genuinely carried on in partnership.

Sixth, is the rate really “5%”?

Readers often refer to “SDLT at 5%” when discussing six or more dwellings. Strictly, the non-residential SDLT system is a banded rate structure rather than a flat 5% charge on the whole price. The top non-residential rate is 5%, but only the portion of chargeable consideration above the relevant threshold is taxed at that rate. So the transaction is not simply taxed at a flat 5% across the board.

Outcome

If six apartments are transferred in one transaction, or in linked transactions, to a limited company controlled by the owner, the transaction will generally qualify for the non-residential SDLT rate treatment rather than the ordinary residential rates.

However:

• SDLT may be charged on market value because the transfer is between connected parties
• the non-residential regime is banded, so it is not simply a flat 5% on the whole amount
• if the properties are genuinely part of a partnership business, the partnership incorporation rules may produce a better result and should be reviewed carefully

Practical Steps

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

• confirm that all units are separate dwellings for SDLT purposes
• confirm whether the transfer is a single transaction or linked transactions
• obtain a reliable market valuation, because connected-company transfers often use market value for SDLT
• check whether the properties are genuinely part of a partnership business, supported by accounts, tax filings, profit-sharing arrangements and partnership evidence
• calculate SDLT under both the ordinary connected-party market value approach and any possible partnership incorporation treatment
• review whether there are any other tax consequences, including capital gains tax and financing issues

Where incorporation relief or partnership treatment is being considered, the facts need to be reviewed carefully before the transfer is carried out.

Conclusion

In general, transferring six apartments to your own limited company in one transaction can bring the deal within the non-residential SDLT rates under the six-or-more dwellings rule. But the analysis does not stop there. The company connection may trigger market value SDLT, and if there is a genuine partnership business, the partnership incorporation rules may change the result significantly.

Legal References Used

• Finance Act 2003, section 55
• Finance Act 2003, section 108
• Finance Act 2003, section 116
• Finance Act 2003, Schedule 15
• 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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