SDLT Charity Relief
Charities can buy property or land without paying Stamp Duty when they meet certain criteria. The purchase must help further the cause of the charity to be considered eligible. 1 in 3 overpay Stamp Duty to HMRC. Read below to see if you could be eligable.
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What is Stamp Duty Charity Relief?
Charities buying a property for charitable purposes don't pay Stamp Duty. To qualify for relief, certain conditions must be met for the sale and use of the property within the next three years.
What is the eligibility criteria for Stamp Duty Charity Relief?
The property or land will be used to further the cause of the charity for at least 3 years after purchase
It is considered an investment when the profits go towards charitable purposes
The transaction is not undertaken to avoid Stamp Duty
Are you owed thousands in Stamp Duty?
- What is the definition of a charity that qualifies for Stamp Duty Relief?
- For a charity to qualify for Stamp Duty relief, it must:
- Be established for charitable purposes only
- Meet the UK tax definition of a charity
- Be subject to the control of a court (e.g., the High Court in England, the Court of Session in Scotland, or the High Court in Northern Ireland)
- Be registered (if required by the laws of the territory)
- Be administered or controlled by “fit and proper” persons (e.g., someone who has not committed tax fraud or been removed from acting as a charity trustee by a charity regulator)
- What is NOT eligible for Charity Relief?
- Any charity that does not meet the above criteria will not qualify for relief. When relief is provided to a charity for a purchase, it may be withdrawn if the charity:
- Stops being a charity within 3 years of purchase
- Uses the property or land for non-charitable purposes within 3 years of purchase
Charity Relief examples
01
Example 1:
A church purchases a house for a vicar to live in during their duties.
After 18 months, the vicar leaves the church and stops practice, but continues to live in the property.
The purchase no longer qualifies for relief and a proportion of Stamp Duty must be paid retrospectively.
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Example 2:
A charity purchases a building for use as a shop.
The charity applies for Stamp Duty relief because the purchase meets all qualifying criteria.
After 3 years, the charity still uses the building as a shop to raise funds for the charity. They remain eligible for relief.
Claiming Charity Relief when purchasing property
To apply for Charity Relief, you must first check if you meet the qualifying criteria. If the criteria are met, an SLDT (Stamp Duty Land Tax) return must be submitted within 30 days of purchase. Failure to submit the return on time can result in a penalty charge. When completing the return, the charity relief code 20 must be entered.
A charity can claim relief when buying a non-residential property, like land.
To be eligible, they do not have to use the whole of the land for charitable purposes, but they must hold the greater part of the land for the charitable cause. If they do not hold the greater part of the land to further their cause, they don’t get relief and must pay Stamp Duty.
For example, if they own 5 acres and use 75% of it to further their cause, this qualifies for relief. If they use only 25% of it for charitable causes, they don’t qualify.
Are you owed thousands in Stamp Duty?
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Are you owed thousands in Stamp Duty?
FAQs about Charity Relief
Charities buying residential and non-residential can claim Stamp Duty Land Tax (SLDT) relief when the purchase meets certain conditions. Firstly, the charity must be a registered charity owned by “fit and proper” persons. Secondly, the purchase must be used, either entirely or majority, for charitable purposes for at least 3 years after purchase. Partial relief may apply when these conditions are not met in full.
Generally, a charity does not pay Stamp Duty when buying commercial property. However, the purchase must meet certain conditions to be exempt from Stamp Duty. For example, it must solely, or the majority, be used for charitable purposes for at least 3 years after the date of purchase. When the charity is buying land, they must use the majority of it for charitable purposes to be exempt.
To apply for Charity Relief, charities must enter the relief code 20 in the Stamp Duty Land Tax (SDLT) return.
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Paul EdwardsI reached out to StampDuty.com in August to discuss a purchase I made last year.
The property was in a bad state of repair, lots needed doing. When StampDuty.com gathered the documents and images of the property, they let me know I could save roughly £40,000. This seemed amazing but i was sceptical, why didn't my lawyer point this out. After many reassuring conversations and pointing to legislation to explain their answers, we pushed ahead.
I am pleased to say I received my refund at the end of October! I just want to thank Joe and the team for all of their hard work and the fast turnaround.