Transfer property to limited company without stamp duty

Transferring property to a limited company can be a strategic move for various reasons, such as tax efficiency, liability protection, and estate planning. However, one significant consideration in this process is the potential liability for Stamp Duty Land Tax (SDLT) in the UK (or equivalent taxes in other jurisdictions). SDLT is a substantial cost that can arise when transferring property, but there are certain circumstances under which it might be possible to mitigate or avoid this tax. This comprehensive guide will explore the methods, legal considerations, and practical steps involved in transferring property to a limited company without incurring stamp duty.

Understanding Stamp Duty Land Tax (SDLT)

Before diving into the strategies for avoiding SDLT, it is essential to understand what SDLT is and when it applies. SDLT is a tax levied on the purchase or transfer of property or land in England and Northern Ireland. Similar taxes exist in Scotland (Land and Buildings Transaction Tax, LBTT) and Wales (Land Transaction Tax, LTT).

Key Points of SDLT:

  • SDLT applies to residential and commercial properties.
  • The rate of SDLT varies depending on the property value, the type of property, and whether the buyer is a first-time buyer, an additional property owner, or a company.
  • SDLT is usually paid by the purchaser of the property.

Transferring Property to a Limited Company: Reasons and Benefits

Transferring property to a limited company can provide several benefits:

  1. Tax Efficiency: Companies often benefit from different tax rules, such as lower corporation tax rates compared to personal income tax rates.
  2. Liability Protection: A limited company structure can protect personal assets from business liabilities.
  3. Estate Planning: Transferring property to a company can be part of an estate planning strategy to manage inheritance tax liabilities.
  4. Professional Management: Managing properties through a company can offer more professional management structures and potential access to investment opportunities.

Strategies for Transferring Property Without SDLT

There are several strategies that may allow for the transfer of property to a limited company without incurring SDLT. These strategies often involve specific conditions and must be approached with careful legal and tax planning.

1. Incorporation Relief

One of the most common ways to transfer property without incurring SDLT is through incorporation relief, which is available when transferring property from a partnership to a limited company.

Conditions for Incorporation Relief:
  • The property must be transferred from a genuine partnership (as defined by HMRC) to a limited company.
  • The partners must receive shares in the limited company in exchange for their interest in the partnership.

Incorporation relief works by deferring the gain that would normally be subject to SDLT. Instead of paying SDLT at the time of transfer, the gain is deferred until the shares in the company are sold.

Steps to Claim Incorporation Relief:
  1. Establish a Partnership: If not already in place, establish a genuine partnership with the property as a partnership asset.
  2. Transfer to Limited Company: Transfer the property from the partnership to a newly formed or existing limited company.
  3. Issue Shares: The company issues shares to the partners in proportion to their interest in the partnership.

2. Group Relief

Group relief may be available when transferring property between companies within the same group. This relief allows for the transfer of assets between group companies without incurring SDLT, provided certain conditions are met.

Conditions for Group Relief:
  • The companies involved must be in a 75% group relationship, meaning one company must own at least 75% of the other, or both must be 75% subsidiaries of a third company.
  • The transfer must be for genuine commercial reasons and not as part of a tax avoidance scheme.

Group relief can be particularly useful for reorganizing property assets within a corporate group structure.

Steps to Claim Group Relief:
  1. Establish Group Relationship: Ensure that the companies involved meet the 75% ownership requirement.
  2. Document Transfer: Properly document the transfer of the property between the group companies, ensuring compliance with HMRC requirements.
  3. Claim Relief: File the appropriate documentation with HMRC to claim group relief from SDLT.

3. Transfer of Property as a Going Concern (TOGC)

A transfer of a property as a going concern (TOGC) can sometimes be structured to avoid SDLT. This typically applies to commercial properties where the property is part of an ongoing business.

Conditions for TOGC:
  • The property must be transferred along with the business that operates from it.
  • The buyer must intend to use the property for the same kind of business.
  • Both the seller and buyer must be VAT-registered if the property is a VATable supply.

While TOGC is more commonly associated with VAT relief, careful structuring can sometimes result in SDLT efficiencies as well.

Steps to Claim TOGC:
  1. Assess Business Operations: Ensure that the property is part of an ongoing business that will continue under the new ownership.
  2. VAT Registration: Ensure both parties are VAT-registered and that the transfer qualifies as a TOGC for VAT purposes.
  3. Document the Transaction: Properly document the transfer, highlighting the continuity of business operations.

4. Multiple Dwellings Relief (MDR)

Multiple Dwellings Relief (MDR) can reduce the amount of SDLT payable when purchasing multiple residential properties in a single transaction. While this does not entirely eliminate SDLT, it can significantly reduce the liability.

Conditions for MDR:
  • The transaction must involve the purchase of more than one dwelling.
  • The relief applies to both individuals and companies.
Steps to Claim MDR:
  1. Identify Eligible Properties: Ensure the properties being transferred qualify as multiple dwellings.
  2. Calculate Relief: Calculate the SDLT liability using the MDR rules, which involve applying the SDLT rates to the average value of the properties rather than the total purchase price.
  3. File SDLT Return: File the SDLT return with the appropriate MDR claim.

Legal and Practical Considerations

1. Professional Advice

Given the complexity of property transfers and the potential for significant tax liabilities, it is crucial to seek professional advice from tax advisors, solicitors, and accountants. They can provide tailored advice based on the specific circumstances and ensure compliance with all legal requirements.

2. HMRC Compliance

Ensuring compliance with HMRC requirements is essential to avoid penalties and interest. This includes maintaining accurate records, filing appropriate returns, and adhering to all conditions for reliefs and exemptions.

3. Valuation of Property

Accurate valuation of the property is critical in determining the potential SDLT liability and ensuring that any reliefs or exemptions are correctly applied. Professional valuations can provide the necessary documentation to support the transaction.

4. Shareholder Agreements

When transferring property to a limited company, particularly one where multiple shareholders are involved, it is important to have clear shareholder agreements. These agreements should outline the rights and responsibilities of each shareholder, ensuring smooth management of the property and business.

5. Mortgage and Financing Considerations

If the property being transferred has an existing mortgage, it is necessary to address the lender’s requirements. The lender may need to consent to the transfer and potentially restructure the financing arrangement to reflect the new ownership.

Case Studies

Case Study 1: Partnership to Limited Company

Scenario: John and Sarah own a rental property as part of a partnership. They decide to transfer the property to a newly formed limited company to benefit from corporation tax rates and limited liability.


  1. Establish a genuine partnership with the property as a partnership asset.
  2. Form a new limited company.
  3. Transfer the property from the partnership to the company.
  4. Issue shares in the company to John and Sarah in proportion to their partnership interest.

Outcome: By using incorporation relief, John and Sarah can transfer the property without incurring SDLT, deferring the gain until the shares are sold.

Case Study 2: Group Relief

Scenario: ABC Ltd. owns a commercial property and wants to transfer it to its wholly-owned subsidiary, XYZ Ltd., for strategic business restructuring.


  1. Ensure ABC Ltd. and XYZ Ltd. meet the 75% group relationship requirement.
  2. Properly document the transfer of the property.
  3. File the necessary documentation with HMRC to claim group relief.

Outcome: The transfer is completed without incurring SDLT, allowing ABC Ltd. to reorganize its property holdings efficiently.

Case Study 3: TOGC

Scenario: A bakery operates from a commercial property owned by the business owner. The owner decides to sell the bakery, including the property, to a limited company that will continue running the bakery.


  1. Ensure the business is transferred as a going concern, with the property included.
  2. Both the seller and buyer must be VAT-registered.
  3. Document the transaction, highlighting the continuity of business operations.

Outcome: The transfer qualifies as a TOGC for VAT purposes, and with careful structuring, the SDLT liability can be minimized.


Transferring property to a limited company can be a beneficial strategy for many reasons, including tax efficiency, liability protection, and estate planning. However, avoiding or minimizing SDLT requires careful planning and consideration of various reliefs and exemptions available under the law. Incorporation relief, group relief, TOGC, and MDR are some of the strategies that can be employed, each with specific conditions and requirements.

Professional advice is crucial in navigating the complexities of property transfers and ensuring compliance with all legal and tax obligations. By understanding and applying these strategies effectively, property owners can achieve their goals while managing their tax liabilities efficiently.

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