Stamp duty when buying through a company?

SouthLondonUser

I own the property I live in. If I buy another one, I have to pay 3% additional stamp duty on top of what I'd have paid, had the new property been my only one.

How does stamp duty work when buying through a limited company? When is the extra 3% due, and when is it not?
Is it due only if the company already owns another property?
Or is it due even if one of the directors of the company owns another property directly, in his own name, outside of a company?

Thanks.

martinsurrey

SouthLondonUser wrote: »

I own the property I live in. If I buy another one, I have to pay 3% additional stamp duty on top of what I'd have paid, had the new property been my only one.

How does stamp duty work when buying through a limited company? When is the extra 3% due, and when is it not?
Is it due only if the company already owns another property?
Or is it due even if one of the directors of the company owns another property directly, in his own name, outside of a company?

Thanks.

All company purchases (over £40k and not short lease) are subject to the 3% additional rate.

Additional rate

5.1 The higher rates will apply to the purchase of major interests in one or more
dwellings by a company, if Conditions A and B are met in respect of at least one of
the dwellings55:

● Condition A - the dwelling is purchased for chargeable consideration of £40,000
or more;

● Condition B - the dwelling is not subject to lease which has more than 21 years
to run on the date of purchase;

5.2 If none of the interests in dwellings meet both Conditions A and B then the higher
rates will not apply to the purchase.

If the purchase price is over £500k you might have to pay 15% stamp duty.

High value corporate purchases

G_M

A quick browse of the forum turns up this thread on the 1st page below yours:

https://forums.moneysavingexpert.com/discussion/5610359

SouthLondonUser

@ G_M, Well, I had of course searched the forum for "stamp duty company" but hadn't fund any conclusive answer.

I had found the Telegraph article, but it's not clear. It simply says that

the 3pc extra stamp duty levied on people buying second properties from April will also apply to people buying through a company.

But it does not clarify the doubts of my original post: any company? Always? Only when the company already has another property? When one of the directors of the company owns another property in his own name?
Which is why I asked the question.

gingercordial

SouthLondonUser wrote: »

But it does not clarify the doubts of my original post: any company? Always? Only when the company already has another property? When one of the directors of the company owns another property in his own name?
Which is why I asked the question.

Any company.

Always.

Does that clarify things?

gembert83

Any company - the government were clear on this otherwise people would just set up a new company every time they wanted to purchase another property to try and avoid the higher rate!

ReadingTim

Did you really think the government hadn't thought of this? Really?!?

nb. the directors don't own the company, the shareholders do.

kingstreet

TBH the company purchase thing was in the consultation document so many people expected to avoid the SDLT by going that route.

They were disappointed when the final rules were published and the loophole had been closed.

steampowered

It is possible to avoid SDLT if you buy the shares in a company which owns property (rather than buying the property directly). This is one of the reasons why high-end properties are often registered in the name of a company rather than the name of the individual who owns the company.

Stamp duty on shares is charged at a much lower rate.

Of course the property would need to already be in the name of a suitable company for that work.

kinger101

steampowered wrote: »

It is possible to avoid SDLT if you buy the shares in a company which owns property (rather than buying the property directly). This is one of the reasons why high-end properties are often registered in the name of a company rather than the name of the individual who owns the company.

Stamp duty on shares is charged at a much lower rate.

Of course the property would need to already be in the name of a suitable company for that work.

Technically yes, but few residential properties are held by companies.

davidmcn

steampowered wrote: »

It is possible to avoid SDLT if you buy the shares in a company which owns property (rather than buying the property directly). This is one of the reasons why high-end properties are often registered in the name of a company rather than the name of the individual who owns the company.

Stamp duty on shares is charged at a much lower rate.

Of course the property would need to already be in the name of a suitable company for that work.

You also have the added risk of taking on all of the company's liabilities - they may have done more than merely own the property.