Stamp Duty Relief for Property Traders

Austin & Carnley Solicitors
3 days ago
3 min read

When it comes to Stamp Duty Land Tax (SDLT), most people immediately think of common reliefs such as Multiple Dwellings Relief or Group Relief between companies. However, there’s a lesser-known exemption that can be particularly valuable for property trading businesses – the Property Trader Exemption.

This relief can offer a full or partial exemption from SDLT where a property trader purchases a residential property from the personal representatives (such as executors) of someone who has passed away. It’s a valuable opportunity for those dealing in probate properties, but it comes with specific conditions that must be carefully met.

Who Can Qualify for the Property Trader Exemption?

To qualify for full SDLT relief, all of the following conditions must be satisfied:

Business Purpose

The buyer must be a company carrying on a business that involves acquiring dwellings from the personal representatives of deceased individuals.
Previous Occupation

The deceased individual must have lived in the property as their main or only residence at some time in the two years before their death.
Land Size Limit

The total area of land acquired, including gardens and grounds, must not exceed the “permitted area” – generally 10,000 square metres (around 2.5 acres).

If all three conditions are met, the purchase may qualify for full SDLT exemption. Where the land exceeds the permitted area, partial relief may still be available, with SDLT charged only on part of the transaction.

How Partial Relief Works

Where the property includes more than the permitted area of land, partial relief can be claimed if the first two conditions above are met. In this case, SDLT will only be due on part of the consideration — specifically, the difference between:

the market value of the whole property (including all land), and
the market value of the permitted area.

This approach ensures that only the excess land element is subject to SDLT, rather than the entire purchase.

When Relief Can Be Withdrawn

It’s important to note that the SDLT relief can be withdrawn after the purchase if certain conditions are breached. Relief will be lost if the property trader:

spends more than the permitted amount on refurbishment (usually £10,000, or 5% of the purchase price if greater, but capped at £20,000);
grants a lease or licence of the property (for example, by renting it out); or
allows anyone connected with the company – such as a director, shareholder, or employee – to occupy the property.

This exemption is designed to encourage prompt resale of probate properties, not long-term letting or personal use.

Refurbishment vs. Safety Works

The rules distinguish between refurbishment and essential safety work. The permitted refurbishment allowance can be used for improvements, but works that are purely to make the property safe — such as replacing unsafe wiring, repairing dangerous structures, or addressing faulty heating systems — do not count towards that limit.

To remain compliant, it’s advisable to prepare a detailed schedule of works and associated costs before completion, clearly identifying which items are safety-related and which are general improvements.

HMRC Scrutiny and Documentation

As with any tax relief, HMRC may request evidence to confirm eligibility. Keeping accurate records, including valuation reports, proof of occupation, and a breakdown of refurbishment costs, is essential to support your claim and avoid any future disputes.

Thinking About Taking Advantage of This Exemption?

If you’re considering purchasing a probate property and want to take advantage of the Property Trader SDLT Exemption, our team at Austin & Carnley can help. Our residential and commercial property specialists are experienced in handling these transactions and can guide you through the process from start to finish.