Corporate Buyer Stamp Duty: Complete Guide to 17% Rate, SPV Structures & ATED

When a company, trust, or other non-natural person purchases residential property in the UK, significantly higher Stamp Duty Land Tax (SDLT) rates apply. This regime was introduced to discourage "enveloping" high-value properties in corporate structures to avoid tax.

As of October 2024, the rate for corporate buyers purchasing residential property valued over £500,000 increased to 17% (up from 15%). This rate is a flat charge on the entire purchase price, not a banded rate structure.

However, the 17% rate does not apply if the property is used for a qualifying business purpose, such as property rental, property development, or property trading. In these cases, standard SDLT rates apply, potentially with the additional 5% surcharge for additional properties.

In addition to SDLT, corporate owners of residential property over £500,000 face the Annual Tax on Enveloped Dwellings (ATED), a recurring annual charge. Together, these taxes make corporate ownership of residential property extremely expensive unless there is a clear commercial justification.

The 17% corporate SDLT rate was introduced to close a tax avoidance loophole and generate revenue from high-value property transactions. Understanding when it applies—and when it doesn't—is crucial for corporate buyers.

When Does the 17% Rate Apply?

The 17% rate applies when all of the following conditions are met:

• 1.The buyer is a non-natural person (company, partnership with a corporate member, collective investment scheme, or certain trusts)
• 2.The property is residential (not commercial or mixed-use)
• 3.The purchase price exceeds £500,000
• 4.The property is not used for a qualifying business purpose (rental, development, trading, or employee/director occupation)

When Does the 17% Rate NOT Apply?

The 17% rate does not apply if the property is purchased for a qualifying business purpose. Qualifying purposes include:

• •Property rental business: The property is let commercially to unconnected third parties
• •Property development: The property is acquired for development and resale
• •Property trading: The company trades in property (buying and selling for profit)
• •Employee/director occupation: The property is occupied by an employee or director (who pays tax on the benefit)

If the company can demonstrate the property is used for one of these purposes, it pays standard SDLT rates instead of the 17% rate. However, the burden of proof is on the buyer, and HMRC may challenge claims if the commercial purpose is not genuine.

Why Was the Rate Increased?

The rate was increased from 15% to 17% in October 2024 as part of broader fiscal measures. The government's objective is twofold:

• 1.Anti-avoidance: Discourage wealthy individuals from holding property in corporate structures to avoid personal SDLT and inheritance tax
• 2.Revenue generation: High-value property transactions generate significant tax revenue at these rates

An SPV (Special Purpose Vehicle) is a company created specifically to hold a single asset, typically a high-value property. SPVs became popular as a mechanism to avoid SDLT on subsequent transactions.

How SPVs Worked Historically

Before the introduction of the 17% rate and ATED, wealthy buyers would:

• 1.Purchase a property in the name of an SPV (paying SDLT on the initial purchase)
• 2.When selling the property, sell the shares in the SPV rather than the property itself
• 3.Share sales are not land transactions, so no SDLT was payable on the sale

This allowed high-value properties to change hands repeatedly without further SDLT. The buyer of the shares acquired control of the SPV and, indirectly, the property.

How the 17% Rate and ATED Closed the Loophole

The introduction of the 17% SDLT rate (initially 15%, now 17%) and ATED made SPV structures far less attractive:

• •The initial purchase by the SPV incurs 17% SDLT (unless the property qualifies for relief)
• •The SPV must pay ATED annually (£4,400 to £290,700 per year, depending on property value)
• •While share sales avoid SDLT, the annual ATED charge and high initial SDLT make the structure economically unattractive

Additionally, HMRC introduced anti-avoidance rules targeting certain share sale structures. In some cases, share sales can trigger SDLT if the transaction is designed to avoid land transaction tax.

When SPVs Are Still Used

SPVs remain common in commercial property transactions and for properties used for qualifying business purposes (rental, development). In these cases:

• •Standard SDLT rates apply (not the 17% rate)
• •ATED relief is available if the property is let commercially or used for property development/trading
• •The SPV structure provides limited liability and facilitates future transactions

ATED (Annual Tax on Enveloped Dwellings) is a yearly tax charged on companies and other non-natural persons that own UK residential property valued over £500,000. ATED applies in addition to SDLT.

ATED Rates (2026)

ATED is banded by property value. The annual charges (as of 2026) are:

These charges are indexed annually. The property is revalued every five years for ATED purposes.

Who Pays ATED?

ATED is payable by companies, partnerships with a corporate member, and collective investment schemes that own UK residential property over £500,000. Individuals and trusts where all beneficiaries are natural persons are generally exempt.

ATED Reliefs

ATED relief is available if the property is used for a qualifying purpose:

• •Property rental business: Let commercially to unconnected third parties
• •Property development: Acquired for development and resale
• •Property trading: Buying and selling property as a trade
• •Employee/director occupation: Occupied by an employee or director (who pays tax on the benefit)
• •Charity use: Owned by a registered charity for charitable purposes

Relief must be claimed by filing an ATED return with HMRC. The company must demonstrate the property qualifies for relief. If the use changes during the year, ATED may be chargeable for part of the year.

ATED and Capital Gains Tax

Companies subject to ATED may also face an ATED-related Capital Gains Tax charge on disposal of the property. The charge is calculated on gains accruing while the property was not eligible for ATED relief.

Deciding whether to purchase property in a company name or personally involves weighing tax, legal, and commercial factors. For most buyers, personal ownership is more tax-efficient.

Personal Ownership: Pros and Cons

Corporate Ownership: Pros and Cons

When Corporate Ownership Makes Sense

Corporate ownership may be advantageous if:

• •The property is used for a qualifying business purpose (rental, development, trading) and qualifies for ATED relief
• •You operate a large-scale property business with multiple properties, where economies of scale and professional management justify the tax cost
• •Limited liability protection is critical (e.g., high-risk property development)
• •Estate planning and succession are priorities, and professional advice confirms corporate structure is optimal

Trusts are another form of ownership structure sometimes used for property. The SDLT treatment of trusts depends on the type of trust and the beneficiaries.

Bare Trusts

A bare trust holds property for the absolute benefit of the beneficiaries, who are entitled to both income and capital. Beneficiaries have an immediate and fixed interest in the property. For SDLT purposes, the beneficiaries are treated as the buyers, not the trust. Standard SDLT rates apply, not the 17% corporate rate.

Discretionary and Other Trusts

Discretionary trusts and other complex trusts where beneficiaries do not have fixed interests are treated as non-natural persons for SDLT purposes. If such a trust purchases residential property over £500,000, the 17% SDLT rate applies unless the property qualifies for relief.

However, ATED does not generally apply to trusts where all beneficiaries are natural persons. The ATED charge targets corporate structures, not family trusts.

Collective Investment Schemes

Collective investment schemes (unit trusts, OEICs) purchasing residential property are treated as non-natural persons and pay the 17% SDLT rate unless relief applies. ATED may also apply depending on the structure.

The term non-natural person is used in SDLT legislation to define entities subject to the 17% rate. Understanding this definition is essential to determine whether the higher rate applies.

What is a Non-Natural Person?

A non-natural person includes:

• •Companies (including UK and foreign companies)
• •Partnerships where any partner is a non-natural person (e.g., a company)
• •Collective investment schemes (unit trusts, OEICs)
• •Certain trusts (discretionary trusts, trusts with corporate beneficiaries)

What is NOT a Non-Natural Person?

The following are NOT non-natural persons and do not pay the 17% rate:

• •Individuals buying in their own name
• •Partnerships where all partners are individuals (with no corporate members)
• •Bare trusts (where beneficiaries are individuals with fixed interests)
• •Registered charities (exempt from SDLT on qualifying charitable purchases)

Mixed Partnerships

If a partnership includes both individual partners and a corporate partner (e.g., two individuals and a company), the partnership is treated as a non-natural person. The 17% rate applies to the corporate partner's share of the purchase, unless the property qualifies for relief.