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HMRC internal manual

Stamp Duty Land Tax Manual

SDLT - higher rates for additional dwellings: Purchases by companies and other non-individuals


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 dwellings [Paras 4 and 7]:

  • Condition A - the dwelling is purchased for chargeable consideration of £40,000 or more;
  • Condition B - the dwelling is not subject to a lease which has more than 21 years to run on the date of purchase;

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

Trustees purchasing properties

Purchases by trustees are treated differently depending whether the trustee is the trustee of a bare trust, a trust with life or income interests or any other trust.

A trustee is a trustee of a bare trust if the beneficiary or beneficiaries are absolutely entitled to the property against the trustees.  It also includes cases where the beneficiary would be absolutely entitled but for disability or age preventing the beneficiary from holding the legal title [Para 3 Sch 16 FA 2003].

A trustee is a trustee of a life interest trust if some beneficiary is entitled to either:

  • to occupy the dwelling for life, or
  • to the income earned in respect of the dwelling [Para 10(1) (c)].

It does not matter if one or more than one beneficiary has the entitlement to occupy or entitlement to income.

A bare trustee purchaser is ignored for the purposes of determining whether a purchase is subject to the higher rates, the absolute beneficiary or beneficiaries are treated as the purchaser or purchasers [Para 3(1) Sch 16 FA 2003 and para 10(2) and (3) Sch 4ZA ].

On a purchase by a trustee of a trust for life or income interests, whether the higher rates apply is determined as if any beneficiaries with the interests above were the purchaser or purchasers and the trustee was not the purchaser [Para 10(3)].

So, if the beneficiary for life is an individual and the purchase is of a single dwelling, the trustee must consider whether the individual, and not the trustee, meets the Conditions C and D referred to at SDLTM09780 and SDLTM09800.  If the beneficiary owns another interest in a dwelling at the end of the day worth £40,000 or more, and not subject to a 21 year lease then it will be a higher rates transaction unless the trustee’s purchase is a replacement of the beneficiary’s main residence.

Where a person purchases a dwelling as a trustee and the trust is neither a bare trust nor a trust for life or income the trustee is liable to the higher rates in the same situation as a company purchaser [Para 13].  That is, where a purchased dwelling meets Condition A (consideration paid is £40,000 or more) and Condition B (not subject to a 21 year lease), the higher rates will apply.

This treatment will apply to a trust that gives the trustee a discretion to apply income between a class of beneficiaries or a trust which accumulates income.


J and K are individuals acting as trustees for the Z trust.  Using trust funds, they purchase a dwelling.  The Z trust entitles an individual beneficiary, L, to occupy the dwelling for life or entitles L to the income from the property.  J and K must consider whether the higher rates would apply if L were purchasing the dwelling rather than them.  So if L has another interest in a dwelling (Condition C) on the effective date and the purchase is not a replacement of L’s main residence (Condition D) then the higher rates will apply, otherwise they will not.


M and N are individuals acting as trustees for the X trust.  Using trust funds, they purchase a dwelling.  The X trust enables M and N to apply the income from the dwelling at their discretion amongst a class of beneficiaries.  M and N in this case are liable to the higher rates if they meet the tests normally applied to companies.  That is, if the chargeable consideration is £40,000 or more (Condition A) and is not reversionary on a longer than 21-year lease (Condition B) the higher rates will apply.

Discretionary trusts and life interests

Life interests in a discretionary trust are treated as interests in a bare trust.




`Para` references are to paragraphs in Schedule 4ZA of the Finance Act 2003.