When landlords decide to move their rental properties into a limited company, Stamp Duty Land Tax (SDLT) is usually the cost that stops them in their tracks. It is often larger than the Capital Gains Tax bill, and unlike CGT there is no equivalent of Incorporation Relief to defer it automatically.
This guide explains why SDLT arises on incorporation, how residential rates and the 5% additional-property surcharge work, and how Schedule 15 Partnership Relief can reduce the charge in the right circumstances. Non-residential and mixed-property transfers follow different SDLT rules, so they need their own calculation. This guide is about transferring existing property; if you are buying a new property through a company instead, start with our property SPV guide so the company and purchase structure are considered before exchange. For the wider transfer picture, see our complete property incorporation guide.
The instinctive reaction is "I already own these properties, why would I pay stamp duty to move them to my own company?" The answer is in the way the law treats connected parties.
Under section 53 of the Finance Act 2003, a transfer of land to a company connected with the transferor is normally charged to SDLT on the market value of the property, rather than the actual price paid. So even if no cash changes hands, or you transfer property to your company in exchange for shares, the market-value rule will normally apply.