Non-resident and corporate buyers: why SDLT gets complicated

A purchase by a company or other non-natural person is the most complex Stamp Duty Land Tax (SDLT) case a conveyancer meets, because two different charging regimes can apply to the same transaction and they have to be told apart. SDLT applies in England and Northern Ireland only; Scotland uses Land and Buildings Transaction Tax (LBTT) and Wales uses Land Transaction Tax (LTT), each with its own rules, so the first step is always to confirm the jurisdiction.

Within SDLT, the two regimes are these. Most corporate residential purchases are charged at the standard residential rates plus the 5% additional-dwelling surcharge, plus a 2% non-resident surcharge where the buyer is non-UK-resident. But where a company or other non-natural person buys a single dwelling for more than £500,000 and no relief applies, a flat higher rate of 17% bites on the whole price. That flat rate was raised from 15% to 17% for transactions with an effective date on or after 31 October 2024. The 17% charge is heavily relieved, and where a relief applies the purchase reverts to the standard rates plus surcharges. The same enveloped dwelling then usually falls within the Annual Tax on Enveloped Dwellings (ATED), an annual charge.

This guide maps the rate stack, the 17%-versus-relief decision, the ATED interaction and the firm's own fee and VAT position. The single most important point to fix at the outset: the corporate flat rate is now 17%, not 15%. The 15% figure (in force from 2012 until 30 October 2024) is superseded and using it for a current transaction understates the tax.

The non-resident surcharge (2%)

A 2% surcharge applies to purchases of residential property in England and Northern Ireland by non-UK-resident buyers, in force from 1 April 2021. It sits on top of the standard residential rates and any additional-dwelling surcharge. It can apply to individuals, companies and certain trusts, so it is not a corporate-only charge.

The residence test for the surcharge is day-count based and is separate from the Statutory Residence Test used for income tax and capital gains tax. Broadly, a buyer is non-UK-resident for the surcharge if not present in the UK on at least 183 days in the 12 months ending with the effective date of the transaction, with specific rules for companies, partnerships and trusts. Because the test turns on facts the firm may not already hold, conveyancers should establish residence status before completion, ideally with a clear written declaration from the buyer, so that the correct surcharge is applied and the return is right first time.

Two features of the surcharge catch firms out. First, there is a retrospective relief: where a non-resident individual who paid the surcharge becomes UK-resident in the relevant period after completion, a refund may be available, so the residence position at the effective date is not always the final word. Second, joint purchases require care, because the surcharge can apply to the whole transaction where any one of the buyers is non-resident, not just to that buyer's share. For a company, the residence test looks at where the company is controlled and managed and at related conditions, so a UK-incorporated company can still be non-resident for the surcharge in some circumstances. The safe approach is to obtain the buyer's residence position in writing and to flag any post-completion change that might open a refund.

Companies and the 5% additional-dwelling surcharge

A company or other non-natural person buying residential property is generally treated as buying an additional dwelling, so the 5% higher-rate-for-additional-dwellings (HRAD) surcharge applies from the first property, not just the second. That surcharge rose from 3% to 5% for effective dates on or after 31 October 2024 (contracts exchanged on or before 30 October 2024 keep the 3% rate under transitional provisions).

So a typical corporate purchase that is under £500,000, or over £500,000 but with a relief in point, is charged at the standard residential rates plus the 5% HRAD surcharge, plus the 2% non-resident surcharge where the company is non-UK-resident. This is the regime that applies to the majority of corporate purchases; the flat 17% charge, considered next, is the exception for unrelieved high-value single-dwelling buys.

It is worth being precise about how the surcharges stack on a relieved purchase. The standard residential rates are progressive (each band applies to the slice of the price within it), and the 5% HRAD surcharge is added to the rate for every band, so the surcharge is effectively a flat 5 percentage points across the whole price. The 2% non-resident surcharge is added on top of that again where the buyer is non-resident. So a non-resident company buying a relieved dwelling can be paying the standard band rate plus 5% plus 2% on the relevant slices. This is materially less than a flat 17% on the whole price for a high-value purchase, which is why the relief analysis matters so much in money terms, but it is still a substantial charge that the conveyancer must compute correctly band by band rather than estimating.

The flat 17% higher rate for non-natural persons over £500,000

This is the key corporate point. Where a company, a partnership with a company partner, or a collective investment scheme buys a single dwelling for more than £500,000 and no relief applies, SDLT is charged at a flat 17% on the whole consideration. This is the anti-enveloping charge, designed to discourage holding high-value homes inside corporate wrappers for non-commercial reasons.

The rate is 17% from 31 October 2024. Before that date it was 15% (the rate in force from 2012). For any transaction with an effective date on or after 31 October 2024, the correct figure is 17%, and using the old 15% rate would understate the SDLT. This is worth stating unmistakably, because the 15% figure is the most commonly repeated stale number in SDLT content. Note also that the flat 17% applies to the whole price, not in bands: a non-natural person buying a single dwelling over £500,000 with no relief does not get the benefit of the lower standard bands on the first slices of the price.

The reliefs from the 17% charge

The flat 17% rate does not apply (the purchase reverts to the ordinary rates plus surcharges) where the dwelling is acquired for a qualifying purpose. The reliefs include where the property is acquired for:

  • a property rental business;
  • a property developer or trader;
  • a trade involving making the property available to the public;
  • purchase by a financial institution in the course of lending;
  • occupation by employees of the purchaser;
  • a farmhouse; or
  • purchase by a qualifying housing co-operative.

Where a relief applies, the SDLT is charged at the standard residential rates plus the 5% HRAD surcharge and (if the buyer is non-UK-resident) the 2% non-resident surcharge, instead of the flat 17%. Two practical points for the conveyancer. First, the qualifying purpose must be evidenced on the SDLT return; the relief is claimed, not automatic. Second, the relief can be clawed back if the qualifying use ceases within the control period (commonly three years), bringing additional SDLT back into charge. Record the qualifying purpose, and make sure the client understands the clawback risk before relying on a relief.

The most common relief in practice is the property-rental-business relief, claimed by companies that buy dwellings to let. It is genuinely available, but it is conditional on the property being held for a qualifying rental business, and the clawback bites if, for example, the company later occupies the property itself, lets it to a connected individual on non-commercial terms, or takes it out of the lettings business within the control period. The developer and trader reliefs work similarly for companies in the business of building, refurbishing or dealing in property. The point for the conveyancer is that claiming the relief is the start of an obligation, not the end of one: the client carries the qualifying use forward, and the firm should make the clawback condition explicit in its advice and on the file so that the client does not inadvertently trigger a further charge.

Establishing buyer status and filing the return

The analysis only works if the firm establishes the buyer's status accurately, and that is a front-loaded task. Before completion, the conveyancer needs to know whether the buyer is a natural person or a non-natural person (a company, a partnership with a company partner, or a collective investment scheme); whether the buyer is UK-resident for the SDLT day-count test; whether the dwelling is a single dwelling and what the consideration is; and whether any relief is intended to be claimed, with the evidence to support it. These facts drive which regime applies, and they should be captured in writing from the client rather than assumed.

On filing, a residential SDLT return and payment are due within 14 days of the effective date of the transaction, which is normally completion. The return must reflect the regime applied, including any relief claimed and the qualifying purpose. Where the firm submits the return on the client's behalf, the firm relies on the information the client has provided, so a clear instruction record protects the firm if a fact later proves to be wrong. Keep the residence determination, the buyer-status analysis and any relief evidence on the file, alongside the SDLT computation, so the basis for the figure submitted is fully documented. This file discipline is the firm's main protection against a later HMRC enquiry or a negligence allegation.

The ATED interaction

A dwelling worth more than £500,000 held by a company, a partnership with a company partner, or a collective investment scheme is within ATED, an annual tax payable mainly by companies that own UK residential property above that value. ATED is charged by value band and recurs every year, in contrast to SDLT, which is a one-off at completion.

ATED has its own reliefs, which broadly track the SDLT corporate reliefs (property rental business, developers and so on). The point most often missed is that a relief-declaration ATED return is required even where a relief reduces the charge to nil. A nil charge does not mean no filing. The conveyancer should flag the ATED follow-on at the point of purchase: the SDLT is dealt with at completion, but ATED requires the client to register and file annually for as long as the enveloped dwelling is held above the threshold. Keep the ATED point proportionate (a signpost, not a full ATED-rates exercise), but make sure the client leaves the transaction knowing the annual obligation exists.

The link between the SDLT relief and the ATED relief is worth drawing out for the client. A company that buys a high-value dwelling for a lettings business and relies on property-rental-business relief to escape the flat 17% SDLT charge will usually rely on the equivalent ATED relief to reduce the annual ATED charge to nil. But the ATED relief is only secured by filing the annual relief-declaration return. So the same qualifying use underpins both reliefs, and a lapse in the annual ATED filing can leave the client exposed to an ATED charge it expected to avoid. A conveyancer who flags this connection at completion, and recommends the client put the annual ATED return in its compliance calendar, adds real value on a high-value purchase and reduces the risk of an avoidable charge down the line.

Putting the rate stack together

A clear decision path keeps the analysis straight:

  1. Is the property in England or Northern Ireland? If in Scotland use LBTT, if in Wales use LTT (see below).
  2. Is the buyer a non-natural person (company, partnership with a company partner, or collective investment scheme) buying a single dwelling for more than £500,000? If yes and no relief applies, charge the flat 17% on the whole price.
  3. If a relief applies, or the price is £500,000 or under, or it is not a single-dwelling case, use the standard residential rates plus the 5% HRAD surcharge.
  4. Add the 2% non-resident surcharge on top wherever the buyer is non-UK-resident, whether an individual or a company.
  5. Where the buyer is a company (or partnership with a company partner, or a CIS) and the dwelling is over £500,000, flag the ATED registration and annual return.

For the standard residential bands that feed into the relieved-purchase calculation (nil to £125,000, then 2%, 5%, 10% and 12%, in force from 1 April 2025), see our guide on SDLT calculation for UK conveyancing solicitors.

The firm's role, fee and VAT

The firm's position splits cleanly in two. The SDLT paid to HMRC for the client is a disbursement: the firm acts as a conduit, the client is the party liable for the tax, and no VAT is added on the recharge. The firm's own conveyancing and SDLT-advisory work is a separate standard-rated supply at 20%. Where the firm advises on which regime applies, screens the reliefs and flags the ATED follow-on, that advisory work is part of its standard-rated supply, and the firm must be VAT-registered once taxable turnover exceeds £90,000. For the VAT treatment of conveyancing work and recharges generally, see our guide on conveyancing VAT rules for 2025/26.

The stakes on getting the regime right are high. A mis-applied 17% charge on a high-value purchase is a six-figure error, and a firm that advised incorrectly faces both a professional negligence claim and a professional indemnity notification. For the wider PII and risk picture, see our guide on the tax treatment of professional indemnity insurance. Documenting the SDLT analysis on file, including the residence determination and any relief claimed, is the practical protection.

Devolved equivalents: Scotland and Wales

SDLT does not cross the border. Scotland uses LBTT (Revenue Scotland) and Wales uses LTT (Welsh Revenue Authority), and neither uses the SDLT 17% flat charge over £500,000 or the 2% non-resident surcharge. Each has its own treatment of corporate and additional-dwelling purchases, including Scotland's Additional Dwelling Supplement and Wales's higher residential rate tables. The jurisdiction is fixed by where the property is located, not by where the buyer or the firm is based. For the Scottish rules see our guide on LBTT rates for Scottish conveyancing firms, and for the Welsh comparison our guide on LTT versus SDLT for Welsh conveyancing.

Worked example: the 17%-versus-relief decision

The following is illustrative, not advice. A company with no qualifying use buys a single dwelling in England for £900,000. No relief applies, so the flat 17% charge bites on the whole £900,000, giving SDLT of £153,000. Using the old 15% rate would produce £135,000 and understate the liability by £18,000, which is exactly the error to avoid.

Now change one fact. A property-rental company buys the same £900,000 dwelling for its lettings business and claims property-rental-business relief. The flat 17% no longer applies. SDLT is instead charged at the standard residential rates plus the 5% HRAD surcharge (plus 2% if the company is non-UK-resident), which produces a materially lower figure than the flat 17%. But two follow-ons attach: the relief can be clawed back if the lettings use ceases within the control period, and the company must claim its ATED position through an ATED return even if a relief reduces the ATED charge to nil.

For contrast, take a non-UK-resident individual buying a £600,000 home to live in. An individual is not a non-natural person, so the flat 17% never applies. SDLT is charged at the standard rates plus the 2% non-resident surcharge, with no HRAD surcharge if it is the buyer's only dwelling. The 2% surcharge catches the individual; the 17% flat charge does not.

Practical checklist for a corporate or non-resident purchase

  1. Establish buyer status: is it a company or other non-natural person, and is the buyer UK-resident for the SDLT day-count test?
  2. Test the flat 17% over £500,000 for a single-dwelling non-natural-person purchase, and screen the reliefs before relying on the standard regime.
  3. Apply the 5% HRAD surcharge and the 2% non-resident surcharge where the standard regime applies.
  4. Evidence any relief on the SDLT return and note the clawback control period.
  5. Flag the ATED registration and annual return follow-on, including the relief-declaration return where the charge is nil.
  6. Recharge the SDLT as a disbursement (no VAT) and charge VAT at 20% on the firm's fee.
  7. File and pay the residential SDLT return within 14 days of the effective date, and document the analysis on file.

Where specialist input helps

The corporate and non-resident rate stack is where SDLT errors are most expensive, and the most common one is simply using the superseded 15% flat rate. An accountant who works with conveyancing firms can sanity-check the regime selection on high-value purchases, confirm that the disbursement and fee VAT are coded correctly, and make sure the ATED follow-on is captured rather than left to surface a year later. The sibling guides on SDLT refund and overpayment claims for conveyancers, abortive conveyancing transactions, VAT and WIP and conveyancing referral fees, SRA transparency and VAT cover the related property-tax and accounting points a conveyancing practice handles.