Care Home Stamp Duty
How stamp duty applies to care homes, nursing homes, and residential care facilities. Care homes are non-residential (C2 use class) for SDLT — paying lower commercial rates. No additional dwelling surcharge applies, and going concern purchases can reduce the taxable consideration further.
In this article
Key Takeaways
- Care homes (nursing homes, residential care facilities) are non-residential for SDLT — classified under C2 use class (residential institutions)
- Non-residential rates apply: 0% up to £150,000, 2% from £150,001 to £250,000, 5% above £250,000
- The 5% additional dwelling surcharge does NOT apply to care home purchases — they are not dwellings
- Converting a care home to private residential dwellings (C3 use class) changes the classification for future sales to residential rates
- All types qualify as non-residential: nursing homes, residential care, dementia care, sheltered housing with on-site care staff
- Going concern purchases may allow exclusion of goodwill and trade fixtures from SDLT-chargeable consideration
Care Homes as Non-Residential Property
Care homes are non-residential property for SDLT purposes. This is a settled classification with little ambiguity — a care home (nursing home, residential care facility, dementia care unit) is an institution providing care services, not an individual dwelling. Use our stamp duty calculator to estimate SDLT on a care home purchase, and see our commercial property complete guide for the full non-residential rate context.
The non-residential classification reflects the institutional nature of care homes:
- Residents do not own or rent the property as their private dwelling
- The building is operated as a regulated care business (CQC-registered in England)
- The property is used for delivering care services, not residential occupation
- Planning use class is C2 (residential institutions) rather than C3 (dwelling houses)
Non-residential = lower SDLT than equivalent residential value
A care home purchased for £500,000 pays £14,500 in SDLT at non-residential rates. The same £500,000 at residential rates would cost £12,500 — but with no additional dwelling surcharge risk and a simpler classification. For larger care home purchases above £1m, non-residential rates (max 5%) are significantly cheaper than residential rates (which can reach 10–12%).
C2 Use Class and SDLT
The Town and Country Planning (Use Classes) Order 1987 classifies properties by their use. For SDLT, the planning use class is an important — though not determinative — indicator of whether a property is residential or non-residential.
| Use Class | Description | SDLT Treatment |
|---|---|---|
| C2 | Residential institutions: care homes, hospitals, nursing homes, prisons, boarding schools | Non-residential |
| C2A | Secure residential institutions: secure hospitals, prisons, young offender institutions | Non-residential |
| C3 | Dwelling houses: private residences, families, small household groups | Residential |
A care home operating with C2 planning permission is non-residential. The moment it is converted to C3 dwellings (individual flats or houses), future purchases are residential. The planning use class at the date of purchase is what matters — not what the building could be converted to.
Non-Residential Rate Bands
Care homes pay SDLT at non-residential rates. Below are the current rates (2026) with worked examples at care home purchase prices.
| Purchase Price Band | SDLT Rate |
|---|---|
| Up to £150,000 | 0% |
| £150,001 to £250,000 | 2% |
| Above £250,000 | 5% |
Worked examples at care home purchase prices
Small residential care home — £500,000
0% on first £150,000 = £0
2% on next £100,000 (£150k–£250k) = £2,000
5% on remaining £250,000 (£250k–£500k) = £12,500
Total SDLT: £14,500
(Residential equivalent at £500k: £12,500 — but no surcharge risk at non-residential)
Medium nursing home — £1,000,000
0% on first £150,000 = £0
2% on next £100,000 (£150k–£250k) = £2,000
5% on remaining £750,000 (£250k–£1m) = £37,500
Total SDLT: £39,500
(Residential equivalent at £1m: £41,250 standard + 5% surcharge = £91,250 if additional property)
Large dementia care facility — £2,000,000
0% on first £150,000 = £0
2% on next £100,000 (£150k–£250k) = £2,000
5% on remaining £1,750,000 (£250k–£2m) = £87,500
Total SDLT: £89,500
(Residential equivalent at £2m: £153,750 — non-residential saves £64,250)
Types of Care Homes and Classification
All of the following qualify as non-residential (C2 use class) for SDLT purposes:
Nursing homes
Registered nursing homes providing 24-hour nursing care. CQC-regulated. Non-residential regardless of size.
Residential care homes
Personal care homes for elderly or disabled residents without 24-hour nursing. CQC-registered. Non-residential.
Dementia care facilities
Specialist dementia care units, memory care homes. Non-residential as C2 institutional use.
Sheltered housing with care (C2)
Communal sheltered housing with on-site care staff and manager. Where the operator provides personal care as part of the service, C2 classification applies and the purchase is non-residential.
Retirement housing (C3) — residential, not non-residential
Retirement housing that is simply age-restricted private accommodation — where residents purchase or rent their flat and no care services are provided — is C3 (dwelling houses) and is residential for SDLT. The distinction:
- C2 (non-residential): communal facilities, on-site care staff, managed service, residents do not own individual units outright
- C3 (residential): age-restricted but otherwise private apartments, no care services, individual ownership or AST tenancies
Converting Care Homes to Residential
Converting a care home to private residential dwellings (flats or houses) is a popular development strategy. The SDLT implications change at each stage:
Stage 1: Purchasing the care home (pre-conversion)
The care home retains its C2 use class at purchase. Non-residential SDLT rates apply. No additional dwelling surcharge. Even if planning permission for residential conversion has been granted, the use class does not change until the conversion is complete and the building is occupied as dwellings.
Stage 2: During conversion works
No SDLT event occurs during construction. The conversion contract with the builder is not a land transaction. SDLT was paid at purchase and no further SDLT is due unless a new land transaction occurs (e.g., acquiring additional land).
Stage 3: Selling converted flats (post-conversion)
Once the care home has been converted to C3 residential flats, each flat sale is a residential transaction for the buyer. The buyer pays residential SDLT rates (and potentially the additional dwelling surcharge if they own other property). VAT on construction may also apply — conversion of non-residential to residential attracts 5% reduced VAT rate, a significant saving.
Scotland and Wales Equivalents
Scotland — LBTT
LBTT applies non-residential rates to care homes under the same C2 classification principle. Non-residential rates: 0% up to £150,000, 1% to £250,000, 5% above. Scotland's Additional Dwelling Supplement (ADS) does not apply to non-residential purchases. CQC equivalent: Care Inspectorate (Scotland).
Wales — LTT
Wales LTT applies non-residential rates to care homes. Rates: 0% up to £225,000, 1% to £250,000, 5% above. The higher nil-rate threshold makes Wales LTT more advantageous for smaller care home purchases than England SDLT. CIW (Care Inspectorate Wales) regulates Welsh care homes.
Investment and Planning Considerations
Going concern purchases
When a care home is purchased as a going concern (the business continues operating under new ownership), certain elements may be excluded from SDLT-chargeable consideration:
- Goodwill: The value of the business reputation, client relationships, and CQC registration — not land, therefore not SDLT-chargeable
- Moveable equipment: Beds, furniture, medical equipment — chattels not subject to SDLT
- Trade stock: Medications, supplies — not land
- The land and buildings: SDLT is charged only on this element
Proper apportionment between property and business elements can meaningfully reduce the SDLT base. HMRC scrutinises excessive apportionments, so all valuations should be independently supported.
Company purchases — no 17% SDLT rate
Residential properties purchased by companies attract the 17% SDLT rate (from 31 October 2024) when the purchase price exceeds £500,000. Care homes are non-residential — this elevated corporate rate does not apply. A care home purchase through a company pays standard non-residential rates regardless of value.
CQC registration and completion timing
The CQC registration of a care home transfers separately from the property purchase. Ensure your solicitor coordinates the SDLT return (due within 14 days of completion) with the CQC registration process. Delays in CQC transfer do not affect the SDLT deadline.
Specialist advice for care home transactions
Care home purchases are complex transactions combining property law, healthcare regulation (CQC), business sale law, and SDLT. Always engage a solicitor with specialist care sector experience and a tax adviser to ensure correct SDLT treatment and optimum apportionment of consideration.
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Emma Richardson, MRICS
Chartered Surveyor & Property Tax Specialist
Emma Richardson is a RICS-qualified Chartered Surveyor with over 12 years of experience in UK property taxation. She founded Stamp Duty Calculator to help buyers understand the complex world of property transaction taxes.