Do you pay SDLT when transferring a personally owned rental property into your own limited company?

Introduction

Many landlords ask whether they can move a property they own personally into a limited company to reduce income tax pressure and allow mortgage interest to be dealt with inside the company. A common follow-up question is whether Stamp Duty Land Tax (SDLT) can be avoided if no cash changes hands.

In most cases, the answer is no. Where a residential property is transferred to a company connected with the owners, SDLT is usually charged by reference to the market value of the property, not the amount actually paid. That can produce a substantial SDLT bill even on what feels like an internal reorganisation.

The Question

A married couple own a former home which is now let to a company in which they have an ownership interest. The rental income is increasing their personal tax exposure, and they are considering transferring the property into the company so that the company would receive the rent and meet the mortgage costs.

The property is worth about £450,000, the outstanding mortgage is about £317,000, and the couple already own another home. They want to know whether SDLT would apply even if the transfer is effectively non-cash, and if so whether SDLT would be charged on the full value.

Nick’s Explanation

Nick’s core point was that HMRC’s guidance reflects the statutory rule for transfers of property to connected companies: SDLT can be charged on the property’s market value rather than the actual consideration.

In anonymised form, his answer was:

“If you transfer land or property to a company, SDLT may be payable on its market value, not the chargeable consideration given. This applies where the person transferring the property is connected with the company. You may also pay the higher rate of SDLT on additional residential properties.”

Applying that approach to the facts given, Nick concluded that the transfer would trigger SDLT on the market value of £450,000 and that the SDLT liability would be about £32,500.

The Law

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

For normal land transactions, SDLT is usually charged on the “chargeable consideration” given for the acquisition. However, special market value rules apply in some connected-party situations.

Where a person transfers land to a company and that person is connected with the company, Schedule 4 to the Finance Act 2003 can deem the consideration to be the market value of the property. In practical terms, that means SDLT is calculated as if the company had paid full market price, even if the transfer is for little, no, or reduced cash consideration.

For residential property, a company buyer is also commonly subject to the higher rates for additional dwellings under Schedule 4ZA to the Finance Act 2003. Broadly, a company buying a dwelling does not get the benefit of the ordinary main residence rules that may apply to individuals. As a result, the higher residential rates generally apply.

If the property is suitable for use as a dwelling at the effective date of the transaction, it is generally treated as residential property for SDLT purposes. In “uninhabitable” or “not suitable for use” arguments, the threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

Analysis

The position can be worked through in stages.

First, there is a transfer of a dwelling from individuals to a company.

Second, the transferors are connected with the company because they have an ownership interest in it. That connected-party relationship is what brings the market value rule into play.

Third, because the market value rule applies, the SDLT calculation is not limited to any mortgage assumed by the company and is not reduced to nil merely because little or no cash is paid. Instead, the starting point is the full market value of the property.

Fourth, the property is an additional dwelling in the wider sense relevant to SDLT, and the buyer is a company. That means the higher residential rates are likely to apply.

On the figures given, the market value is £450,000. Using the higher residential rates in force at the time of the advice, the SDLT calculation is:

• 3% on the first £250,000 = £7,500
• 8% on the next £200,000 = £16,000
• Total SDLT = £23,500

However, Nick’s figure of £32,500 reflects the higher rate structure applicable on the basis he was using for that transaction date. On that basis, the calculation was:

• 5% on the first £250,000 = £12,500
• 10% on the next £200,000 = £20,000
• Total SDLT = £32,500

The important legal point is the same either way: the transfer is not treated as free of SDLT simply because it is an internal transfer or because the consideration is non-cash.

The outstanding mortgage of about £317,000 does not cap the SDLT charge where the market value rule applies. Likewise, the fact that the owners are trying to improve tax efficiency does not create an SDLT exemption.

It is also worth noting that SDLT is only one part of the tax picture. A transfer from personal ownership to a company can also raise capital gains tax issues, financing issues, and company law and lender consent issues. Those points sit outside the SDLT answer but are often critical in practice.

Outcome

On the facts described, a transfer of the dwelling into the owners’ connected limited company would normally trigger SDLT on the property’s market value, not on any lower amount actually paid.

That means the transaction is likely to produce a substantial SDLT charge even if it is structured as a non-cash transfer. On the figures used in Nick’s reply, the SDLT bill would be about £32,500.

Practical Steps

If you are considering moving a personally owned property into a company, the sensible steps are:

1. Confirm whether the company is connected with you for SDLT purposes. In most owner-managed company cases, it will be.
2. Obtain a realistic current market valuation of the property, because market value may drive the SDLT calculation.
3. Check the SDLT rates in force on the expected effective date of transfer, including the higher residential rates.
4. Review whether the property is clearly residential and suitable for use as a dwelling. Arguments that a property is not suitable for use now face a relatively high threshold after Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.
5. Consider the wider tax consequences, especially capital gains tax and the income tax and corporation tax position after incorporation.
6. Check the mortgage terms and whether the lender will consent to a transfer to a company.
7. Take transaction-specific advice before signing anything, because the SDLT position can usually be identified in advance.

Conclusion

If you transfer a personally owned residential property into your own limited company, SDLT will usually be charged on the property’s market value because the company is connected with you. In a case like this, the transfer is not treated as SDLT-free simply because no cash changes hands.

Legal References Used

• Finance Act 2003
• Finance Act 2003, Schedule 4
• Finance Act 2003, Schedule 4ZA
• Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799
• HMRC guidance on transfers of land or property to or from a company

This page was last updated on 22 March 2026.

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