Limited Company Buy to Let Stamp Duty
A company always pays the higher rates of stamp duty, from the first pound and on every property. There is no first purchase relief for a company, so pricing the stamp duty correctly is part of every company buy to let decision, not an afterthought.
When a limited company buys a residential buy to let in England, it pays stamp duty land tax at the higher rates, which include the 5% additional dwelling surcharge on every band. A company never gets the exemption an individual first time buyer might, and the surcharge applies even on the company's very first property. On a £250,000 buy to let a company pays around £15,000 in stamp duty. A separate 15% flat rate can apply to company purchases of dwellings over £500,000 that are not used as a genuine rental business, so buy to let landlords should structure to avoid it.
At a glance
- Who paysThe company, as the buyer of the property
- Rate basisHigher rates, including the 5% additional dwelling surcharge
- First property reliefNone; companies always pay the surcharge from the first purchase
- Example, £250,000Around £15,000 of stamp duty
- £500,000+ trapA 15% flat rate can apply if not a genuine rental business
- Scotland and WalesDifferent taxes (LBTT and LTT) with their own rates
Why a company always pays the higher rates
Stamp duty land tax in England has two layers of rates for residential property: standard rates, and higher rates for additional properties. The higher rates add a surcharge, currently 5%, to every band. Individuals pay them when buying a property that is not their only home. A company pays them on every residential purchase, full stop.
There is no concept of a company's first home, so there is no first purchase exemption. Even a brand new SPV buying its very first buy to let pays the surcharge. This is a fixed cost of the company route that has to be built into the numbers alongside the deposit.
This is one of the upfront costs weighed across the limited company property finance decision. It matters most when transferring an existing buy to let to a company, because the company pays this surcharge on the way in.
The stamp duty rates a company pays
These are the higher rates that apply to a company buying residential property in England, band by band. The surcharge is already included in each figure.
| Portion of price | Company (higher) rate |
|---|---|
| Up to £125,000 | 5% |
| £125,001 to £250,000 | 7% |
| £250,001 to £925,000 | 10% |
| £925,001 to £1,500,000 | 15% |
| Above £1,500,000 | 17% |
Stamp duty is tiered, so each rate applies only to the slice of the price within that band, not the whole price. That is why the effective rate on a modest property is well below the headline band figure.
A worked example
Take a company buying a buy to let for £250,000. The tax is worked out band by band, then added together.
| Band | Amount in band | Rate | Tax |
|---|---|---|---|
| Up to £125,000 | £125,000 | 5% | £6,250 |
| £125,001 to £250,000 | £125,000 | 7% | £8,750 |
| Total | £250,000 | £15,000 |
So the company pays £15,000, an effective rate of 6% on the £250,000 price. On a £400,000 property the bill rises to around £27,500. Because the surcharge sits on every band, the company figure is always meaningfully higher than an individual buying their only home would pay.
Work out the exact figure for your purchase in the landlord stamp duty calculator, which handles the company higher rates automatically. For the borrowing itself, see the limited company buy to let mortgages page and can a limited company get a mortgage.
The £500,000 flat rate trap
There is a separate rule landlords should know about. A company buying a single dwelling for more than £500,000 can be charged a flat 15% on the whole price, rather than the banded higher rates. This was designed to catch high value homes enveloped in companies for personal use.
Genuine buy to let escapes it. Where the company acquires the property as part of a property rental business, letting it to third parties on commercial terms, relief from the 15% flat rate applies and the normal higher rates are charged instead. This is one reason it matters that the company is a real property business, not a personal shell.
If your company is buying a higher value dwelling, make sure it genuinely qualifies as a rental business so the 15% flat rate relief applies. This is a point to confirm with your accountant and conveyancer before exchange, not after.
England, Scotland and Wales differ
Everything above is stamp duty land tax, which applies in England and Northern Ireland. Scotland charges Land and Buildings Transaction Tax with its own bands and an Additional Dwelling Supplement. Wales charges Land Transaction Tax with its own higher residential rates. A company buying there faces an equivalent surcharge, but the figures are not the same, so check the tax for the country where the property sits.
Rates and examples here are illustrative and for England and Northern Ireland. Stamp duty rules change and interact with your circumstances, and the flat rate relief and cross border taxes have specific conditions. Confirm the exact liability with a qualified accountant or conveyancer, and let us structure the finance around it.
- Stamp duty land tax (SDLT)
- The tax on buying property in England and Northern Ireland, charged in tiered bands on the purchase price.
- Additional dwelling surcharge
- The extra 5% added to every stamp duty band on additional residential property, which a company always pays.
- Higher rates
- The stamp duty rates that include the additional dwelling surcharge, applied to every company residential purchase.
- 15% flat rate
- A flat stamp duty charge on company purchases of dwellings over £500,000, from which genuine rental businesses are relieved.
Limited Company Buy to Let Stamp Duty: common questions
Can you avoid stamp duty through a limited company?
No. A company does not avoid stamp duty; it actually pays more than an individual buying their only home, because it always pays the higher rates including the 5% additional dwelling surcharge from the first property. Buying through a company is done for the treatment of rental income, not to save stamp duty, and the surcharge is a cost to build into the plan.
How much stamp duty will a limited company pay?
A company pays the higher rates on residential property in England: 5% up to £125,000, 7% to £250,000, 10% to £925,000, then 15% and 17% above. On a £250,000 buy to let that is around £15,000, an effective 6%. The tax is tiered, so each rate applies only to the portion of the price in that band. Use our landlord stamp duty calculator for the exact figure.
What happens when a limited company buys a buy to let property?
The company is the legal buyer and pays stamp duty at the higher rates, needs its own company buy to let mortgage with a personal guarantee from the directors, and holds the property as an asset taxed under corporation tax on the rental profit. The deposit typically enters the company as a directors loan. It is a full purchase, with all the costs of one, not a shortcut.
Do you pay VAT on stamp duty for a buy to let property?
No. Stamp duty land tax is a tax in its own right and is not subject to VAT, so there is no VAT to add on top of it. Residential lettings are also generally exempt from VAT. VAT can arise on some commercial or mixed use property transactions, which is a separate matter to check with your accountant if the property is not purely residential.
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