SDLT When You Transfer Property to Your Own Limited Company

Move a rental property into your own limited company and HMRC does not look at what you paid for it. Because you and the company are connected persons, Stamp Duty Land Tax (SDLT) is charged on the property's open market value at the date of transfer, and the company pays it as if buying an additional residential property on the open market. That single rule, in section 53 of the Finance Act 2003, is what makes incorporating an existing portfolio expensive, and it is the part most landlords underestimate when they model the move.

On a typical buy-to-let that has grown in value, the connected-party charge for 2026/27 turns into a five-figure SDLT bill payable in cash up front, before you have factored in the separate Capital Gains Tax charge on the same transfer. Whether incorporation is worth it at all turns on those two entry costs against the long-run corporation tax saving, so getting the SDLT number right comes first.

The connected-party rule: SDLT is charged on market value, not what you paid

When you transfer a property to a company you control, you are not dealing at arm's length. Section 53 FA 2003 deals with this by deeming the chargeable consideration to be not less than the property's market value, regardless of what actually changes hands. You could transfer the property for nil, for £1, or in exchange for shares, and the SDLT result is the same: it is computed on the full open-market value at the effective date.

"Connected" takes its meaning from section 1122 of the Corporation Tax Act 2010. You are connected with a company you control, whether alone or with associates such as a spouse, civil partner or other relatives. So a husband-and-wife company, a family SPV, or a one-person SPV all fall squarely inside the rule. On an SDLT transfer of property to a limited company, the connected party status is what triggers market-value treatment, and it cannot be sidestepped by pricing the transfer low.

Three practical consequences follow:

• The original purchase price is irrelevant. A flat bought in 2009 for £140,000 and worth £300,000 today is taxed on £300,000.
• For higher-value or unusual properties, support the figure with an RICS valuation. HMRC can and does challenge market values that look conveniently low, and the burden of evidencing the figure sits with you.
• The company is the purchaser and the person legally liable for the SDLT, even though the value flows out of your personal estate.

What rate does a company pay? The 2026/27 SDLT bands with the surcharge

A company acquiring a residential dwelling is treated as buying an additional property, so the 5% additional dwellings surcharge applies on top of the standard residential bands. The surcharge was raised from 3% to 5% for transactions with an effective date on or after 31 October 2024, and the standard 0% threshold returned to £125,000 from 1 April 2025 after the temporary £250,000 nil band expired. Many older guides still show a £250,000 nil band; that is out of date.

The bands are marginal, meaning each slice of value is taxed at its own rate, not the whole price at the top rate. For a company buying an additional residential dwelling in England or Northern Ireland:

Portion of market value	Standard rate	Company / additional dwelling rate (with 5% surcharge)
£0 to £125,000	0%	5%
£125,001 to £250,000	2%	7%
£250,001 to £925,000	5%	10%
£925,001 to £1,500,000	10%	15%
Above £1,500,000	12%	17%

There is one further trap for higher-value single dwellings. Where a company buys a single residential dwelling worth more than £500,000, the flat 17% rate under Schedule 4A FA 2003 can apply to the whole price instead of the banded rates above. The most common relief from the 17% flat charge is the let-property relief, available where the dwelling is held as part of a genuine letting business let to unconnected tenants on commercial terms. Most buy-to-let SPVs qualify for that relief and so fall back to the banded surcharge rates, but the relief has to be claimed and the property genuinely commercially let.

Worked examples: what the company actually pays

The figures below use the company surcharge rates in the table. They show the SDLT only; the personal CGT position is a separate cost dealt with further down.

Example 1: a £300,000 terraced rental

Mark, a landlord in Leeds, transfers a terraced let worth £300,000 into his SPV:

• First £125,000 at 5% = £6,250
• £125,001 to £250,000 (£125,000) at 7% = £8,750
• £250,001 to £300,000 (£50,000) at 10% = £5,000
• Total SDLT: £20,000

Example 2: a £400,000 property

• First £125,000 at 5% = £6,250
• £125,001 to £250,000 (£125,000) at 7% = £8,750
• £250,001 to £400,000 (£150,000) at 10% = £15,000
• Total SDLT: £30,000

Example 3: a £750,000 property

• First £125,000 at 5% = £6,250
• £125,001 to £250,000 (£125,000) at 7% = £8,750
• £250,001 to £750,000 (£500,000) at 10% = £50,000
• Total SDLT: £65,000

The pattern is unforgiving: the surcharge bites on the first pound, so even modest portfolios generate five-figure SDLT bills that have to be funded in cash within 14 days of completion. That cash cost, not the headline CGT, is often what stalls an otherwise sensible incorporation.

Which SDLT reliefs still work after the 2024 reforms

Multiple Dwellings Relief: abolished from 1 June 2024

Multiple Dwellings Relief (MDR) was historically the main relief used to soften bulk residential acquisitions and many incorporations. It was abolished by the Finance (No.2) Act 2024 for transactions with an effective date on or after 1 June 2024, with anti-forestalling rules to stop late claims through sub-sales or option arrangements on pre-1-June contracts. If a guide tells you to use MDR on a portfolio transfer today, it is out of date. Note that MDR still exists in Scotland (LBTT) and Wales (LTT), which did not follow the English abolition.

Genuine partnership incorporation under Schedule 15 FA 2003

For an existing portfolio, the one mainstream route to nil or reduced SDLT is incorporating a real letting partnership. Schedule 15 FA 2003 reduces the chargeable consideration by the "sum of the lower proportions", and where the partners transferring the property are the same people who own the company, that sum can reach 100%, taking the chargeable consideration, and the SDLT, to nil. The catch is substance. HMRC expects a genuine, pre-existing partnership with its own SA800 partnership tax returns, partnership accounts and, where mortgaged, joint borrowing. A husband-and-wife co-ownership is not automatically a partnership, and a partnership formed weeks before the transfer invites a challenge under the section 75A anti-avoidance code. The mechanics of partnership SDLT relief and the sum of the lower proportions are worth working through in full before you rely on this route.

The six-dwellings rule (six or more properties in one transaction)

Section 116(7) FA 2003 automatically treats six or more separate dwellings acquired in a single transaction as non-residential property. The non-residential rates apply (0% on the first £150,000, 2% from £150,001 to £250,000, 5% above) and no additional dwellings surcharge is due. This is a statutory deeming rather than a relief you claim, so you simply report on the non-residential basis. It survived the MDR abolition and is the principal portfolio-friendly route for genuine bulk transfers of six or more dwellings completing together. Whether multiple contracts count as a single transaction depends on whether they are "linked" under section 108 FA 2003, so the structuring of how the transfers complete matters.

Sub-sale relief

Sub-sale relief under section 45 FA 2003 can remove SDLT where you are under contract to buy a property and, before completion, transfer the contract to your company so the company completes the original purchase. It is genuinely useful for new acquisitions, but it cannot retrofit an existing portfolio you already own. If you already hold the property, there is no purchase contract left to assign.

SDLT is only half the bill: the Capital Gains Tax disposal

Transferring a property to your company is a disposal at market value for Capital Gains Tax, even though no cash changes hands. The personal gain is taxed at 18% (basic rate) or 24% (higher rate) on residential property, after the £3,000 annual exempt amount. On a property that has grown substantially in value, the CGT can dwarf the SDLT.

Section 162 incorporation relief can defer that CGT. It is no longer automatic: for transfers on or after 6 April 2026, Finance Act 2026 requires you to claim the relief, by the first anniversary of the 31 January following the tax year of the transfer. It applies where a genuine business, including a property letting business actively managed as such, transfers as a going concern with all its assets (other than cash) in exchange wholly or partly for shares. The deferred gain is rolled into the base cost of the shares you receive. Two points are easy to miss:

• Section 162 relieves the CGT but does nothing for the SDLT. The company still pays SDLT on market value. A transfer can therefore be fully CGT-deferred and still carry a £30,000 SDLT charge.
• Whether passive buy-to-let amounts to a "business" for section 162 is a question of fact, turning on the time and activity devoted to running the lettings. The leading authority, Ramsay v HMRC [2013], confirms that sufficiently active management can qualify, but a handful of hands-off lets managed by an agent may not.

The relief also creates a useful by-product: the market value of the property transferred, less any liabilities, becomes a credit on your director's loan account, which you can later draw down tax-free as the company repays it. Both sides of the decision are set out in full under section 162 incorporation relief and incorporating without triggering CGT.

Scotland and Wales: LBTT and LTT, not SDLT

SDLT only applies to property in England and Northern Ireland. The two devolved jurisdictions run their own land transaction taxes with their own bands, surcharges and reliefs, and the differences are large enough to change the answer entirely.

Jurisdiction	Tax	Additional-dwelling charge	Is MDR available?
England and Northern Ireland	SDLT (HMRC)	5% surcharge on the standard bands	No (abolished 1 June 2024)
Scotland	LBTT (Revenue Scotland)	Additional Dwelling Supplement at 8% on the whole price	Yes (retained)
Wales	LTT (Welsh Revenue Authority)	Separate higher-rates band table for additional property	Yes (retained, but modified)

The Scottish ADS is particularly punishing on company transfers because it is charged at 8% on the entire price, not on a banded basis. A company taking on a £200,000 Scottish flat pays £16,000 of ADS alone, before standard LBTT. A cross-border portfolio therefore needs each jurisdiction priced separately; you cannot extrapolate an English SDLT figure across the whole holding.

MTD readiness: a company sidesteps it, you do not

Making Tax Digital for Income Tax (MTD for ITSA) is live. It is mandatory for individual landlords with qualifying income above £50,000 from 6 April 2026, above £30,000 from 6 April 2027 and above £20,000 from 6 April 2028. Limited companies sit outside MTD for ITSA entirely; they file an annual CT600 instead. If your rental income crosses the MTD threshold, moving the portfolio into a company removes the quarterly-update obligation on that income, which is a genuine, if secondary, reason to incorporate. It does not, of course, change the SDLT entry cost.

So when does the SDLT cost make sense?

The honest answer is that the SDLT and CGT entry costs only pay back over a long enough hold, through the lower corporation tax treatment of profits and the company's full deduction of mortgage interest that Section 24 denies to individuals. A few patterns tend to hold:

• New acquisitions go in the company; legacy stock often stays out. Buying new property directly through the company still costs the 5% surcharge but avoids the personal CGT disposal and the double valuation. Keeping mortgaged personal property where it is sidesteps the transfer SDLT entirely on the legacy portfolio.
• Mortgage-free properties are cheaper to move, because there is no lender consent to negotiate and no risk of the transfer being treated as a refinancing event.
• A genuine partnership history changes the maths. If you already run a real letting partnership with its own returns, the Schedule 15 route can take the SDLT to nil, which is often the difference between incorporation working and not.

None of these is a default. The right structure depends on your portfolio's size, gearing, growth profile and how long you intend to hold. For a full model of both entry taxes side by side, see our complete guide to buy-to-let limited companies and our walkthrough of how to transfer property into a limited company.

Filing, payment and getting the value right

The company must file the SDLT return and pay the tax within 14 days of the effective date, which is normally completion. Late filing and late payment both attract penalties, and interest runs on unpaid SDLT at HMRC's prevailing rate. Because the charge is built on market value, the valuation is the single most important number in the whole exercise: too low invites an HMRC challenge and penalties, too high overpays tax you will never recover. For any transfer where significant SDLT is at stake, an RICS valuation contemporaneous with the transfer is the evidence that defends the figure you report.

The decision to incorporate should turn on the long-run tax position, not the headline entry cost alone, but you cannot judge the long run until the entry cost is priced accurately. A specialist property accountant can model the SDLT, the CGT, the section 162 and Schedule 15 positions and the ongoing corporation tax outcome together, so the number you are weighing is the real one.