When you transfer property to a company you control, section 53 of the Finance Act 2003 charges Stamp Duty Land Tax on at least the property’s market value, whatever price is actually paid and even if it is a gift. The only exceptions in section 54 cover certain trustee companies and distributions by a company, but a transfer out of a genuine partnership is taxed under the partnership rules instead, which can reduce the charge sharply.

Why does market value apply?

Section 53 applies where the purchaser is a company and either the vendor is connected with it, or some or all of the consideration is the issue or transfer of shares in a company with which the vendor is connected. Section 53(1A) then deems the chargeable consideration to be not less than the market value of the property at the effective date and, for the grant of a lease at a rent, not less than that rent.

Two further rules close the obvious gaps. Section 53(4) switches off the exemption in paragraph 1 of Schedule 3 for transactions with no chargeable consideration, so a gift to your own company is taxable. And because the test is “not less than” market value, a price above market value is still taxed on the price. SDLTM30221 gives HMRC’s example: a property transferred for £170,000 is taxed on £275,000 if that is its market value, but on £170,000 if its market value is only £150,000.

Section 53 is subject to any other provision giving exemption or relief, so group relief, for example, can still apply between companies; see SDLT group relief.

Who counts as connected with the company?

Section 53(2) imports section 1122 of the Corporation Tax Act 2010. Under section 1122(3) a person is connected with a company if they control it, or if they and persons connected with them together control it. Section 1122(5) connects an individual with their spouse or civil partner, their relatives, and the spouses and relatives of those people, and section 1122(7) connects partners with each other. So a transfer by a husband to a company controlled by his wife, or by a parent to a company controlled by the family, is caught just as much as a transfer to your own company. Another company under common control is also connected under section 1122(2). The definition is explained in connected persons for tax.

Shares count as consideration too. SDLTM30224 deals with a property transferred in exchange for new shares: if the vendor is connected with either company involved, the charge is on market value, or on the value of the shares if that is higher.

How is market value worked out?

Section 118 of the Finance Act 2003 takes its definition from the capital gains rules: the price the property might reasonably be expected to fetch on a sale in the open market. SDLTM04140 says it is the purchaser’s responsibility to provide the valuation; professional advice should be considered, but a formal valuation is not compulsory, and the figure on the return can be the subject of an enquiry. Market value excludes VAT, even where VAT is charged on the transfer, because it is based on a hypothetical sale.

Waiting for a valuation does not extend the 14 day filing deadline. HMRC’s penalty appeal guidance says you should use your best estimate and amend the return when you have the figure; see the SDLT return deadline and penalties.

What rates does the company pay?

For a residential property the company is a buyer like any other except that, as HMRC’s corporate bodies guidance puts it, there is a 5% surcharge on residential properties bought by companies, and a 17% rate on dwellings costing more than £500,000 unless a relief such as the one for property rental businesses applies. Commercial property uses the ordinary non residential bands; see SDLT on commercial property purchases.

Illustration only. A landlord moves a buy to let flat worth £300,000 into a company he owns, in return for shares. Section 53 sets the consideration at £300,000. Using the residential bands for 2026 to 2027 with the 5% surcharge added to each band:

Slice Rate Tax
First £125,000 0% + 5% £6,250
Next £125,000 2% + 5% £8,750
Final £50,000 5% + 5% £5,000
Total £20,000

Across a portfolio this is often the largest cost of incorporation, alongside capital gains tax, which is covered in incorporation relief.

What are the exceptions in section 54?

Section 54 lists three cases where section 53 does not apply, and SDLT is charged only on any consideration actually given:

  • Case 1: immediately after the transaction the company holds the property as trustee in the course of a business that consists of or includes managing trusts, such as a professional trust corporation.
  • Case 2: immediately after the transaction the company holds the property as trustee, and the vendor is connected with it only because of section 1122(6), the rule that connects trustees with the settlor and companies the trustees participate in.
  • Case 3: the vendor is itself a company and the transfer is, or is part of, a distribution of its assets, whether or not on a winding up. This does not apply if the property was the subject of a group relief claim by the vendor in the three years before the effective date. SDLTM30220 adds that HMRC does not intend this restriction to bite where that group relief was withdrawn at or before the effective date.

None of these helps an individual landlord transferring property to their own trading or investment company. Case 2 is narrow too: it only works where the trustees’ connection with the company arises solely from the trust.

How do the partnership rules change the answer?

A transfer from a partnership to a person connected with a partner falls within paragraph 18 of Schedule 15, which sets the consideration at a proportion of market value: market value multiplied by (100 minus the sum of the lower proportions) per cent. SDLTM34160 says that where a transaction is within both section 53 and paragraph 18, the partnership rules take priority.

HMRC’s example at SDLTM34170 shows the effect. A partnership of A, B and C, with shares of 60%, 20% and 20%, transfers a freehold worth £250,000 to a company controlled by B and C, who are married. Section 53 alone would charge £250,000. Under paragraph 20, B and C are corresponding partners because they are individuals connected with the company, so the sum of the lower proportions is 40 and SDLT is charged on 60% of £250,000, or £150,000.

Following the same steps, where every partner is an individual connected with the company and the company takes the whole property, the sum of the lower proportions reaches 100 and the chargeable consideration is nil. Two limits apply:

  • The partnership must be real. SDLTM33110 says a partnership exists for SDLT only if the entity carries on a business, and that simply holding investment property jointly might not be one, even with a partnership deed. See whether joint letting is a partnership.
  • Under paragraph 24, where all the partners are companies and the sum of the lower proportions is 75 or more, the charge reverts to full market value.

The wider Schedule 15 rules, including transfers into a partnership, are covered in SDLT and partnerships.

What mistakes come up most often?

  • Entering the nominal price, or nil for a gift, on the return instead of market value.
  • Forgetting that a company controlled by a spouse or other relative is connected.
  • Assuming that taking over the mortgage, rather than paying cash, avoids the market value rule.
  • Leaving out the 5% surcharge for companies on residential property.
  • Relying on the partnership rules where the owners have never actually run a property business together.
  • Filing late while waiting for a valuation instead of using an estimate and amending; see how to amend an SDLT return.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.