How acquiring the company that owns a property can reduce SDLT compared with a direct purchase. SPV share transfers, due diligence and tax risks explained.
Buying London Property by Acquiring the Company: SDLT Savings Strategy
Many investors do not know: some London properties are held in company names. If you want to buy, you have two routes:
- Buy the property → SDLT is payable
- Buy the company that owns the property → share transfer tax applies instead
The second route can deliver substantial savings in the right circumstances.
Why a Share Purchase?
On transfers of shares in UK limited companies, SDRT (Stamp Duty Reserve Tax) is charged at just 0.5%.
Compare:
- £3,000,000 direct purchase (non-UK resident, second property): SDLT ~£421,250
- Acquiring the company that owns the same property: SDRT ~£15,000
Difference: approximately £406,000.
Brick & Fortune's Approach
"Buy the company, not the property" is a cornerstone of our Knightsbridge advisory model, especially when:
- The seller already holds the asset in a company
- Off-market negotiations create room to structure the deal
- Portfolio buyers want to optimise tax on larger acquisitions
When Does It Apply?
This strategy requires:
- The property must already be registered in a company name
- The company must be clean — no major liabilities, litigation, or tax arrears
- The buyer must acquire 100% of the shares
- HMRC must not treat the arrangement as artificial SDLT avoidance
Due Diligence: Risks of a Share Purchase
When you buy the company, you inherit its entire legal and financial history, not just the property.
What to Check
| Area | Risk | |---|---| | Tax debt (HMRC) | Unpaid tax from prior periods | | Litigation | Claims against the company | | Mortgage | Charge over the property | | Hidden shareholders | Undisclosed partners | | SDLT history | Correct tax paid on prior acquisitions? | | Companies House records | Directors, address, share capital | | Tenancy | AST terms if let |
A solicitor and independent accountant are essential.
SDLT Anti-Avoidance Rules
HMRC scrutinises SDLT avoidance via share sales closely:
- Schedule 7 FA 2003: Rules targeting arrangements that transfer property economic ownership without a land transfer
- General Anti-Abuse Rule (GAAR): Catches artificial tax arrangements
Important: The structure must have genuine commercial purpose or operational history. HMRC may challenge "shell company" transfers created solely to avoid SDLT.
A tax advice letter before completion should be standard practice.
Alternative: Place Property in an SPV, Then Sell the SPV
If the seller holds personally but wants to accelerate the deal:
- Seller transfers the property into an SPV
- Buyer acquires the SPV shares
- SDRT at 0.5% applies
Caution: Transfer into the SPV may trigger CGT and SDLT — net saving must be modelled.
Who Uses This Strategy?
Common profiles:
- Off-market prime purchases at £3M+
- Sellers who prefer to dispose of a company rather than the asset
- Institutional buyers prioritising tax efficiency
- Portfolio sales holding multiple properties
Summary
| Method | SDLT/SDRT | Risk | Process | |---|---|---|---| | Direct property purchase | 5–17% (banded) | Low | Standard | | Share purchase | 0.5% (SDRT) | Medium–High (due diligence) | Complex | | SPV setup then share sale | 0.5% + setup cost | Medium | Complex |
Share purchase strategy advisory:
+44 7990 38 1102 | investinlondon.com.tr