Charity Relief

Key facts

Qualifying charities can claim full SDLT relief (0% rate) on property purchases.
The property must be purchased for qualifying charitable purposes.
The purchaser must be a charity within the meaning of section 67 of the Charities Act 2011 (or equivalent).
Relief can be withdrawn if the property ceases to be used for charitable purposes within 3 years.
An SDLT return must still be filed, claiming the relief.

Overview of Charity Relief

Charity relief provides a complete exemption from SDLT for qualifying land and property acquisitions by charities. When the relief applies, the SDLT rate is effectively 0% on the entire consideration.^[1]

This is one of the most valuable SDLT reliefs, as it applies regardless of the purchase price and covers both residential and commercial property.

Conditions for Relief

To claim charity relief, all of the following conditions must be met:^[2]

The purchaser is a charity (within the meaning of the Charities Act 2011 for English and Welsh charities, or equivalent legislation for Scottish and Northern Irish charities)
The purchaser intends to hold the property for qualifying charitable purposes
The transaction is not entered into for the purpose of avoiding SDLT

What Are Qualifying Charitable Purposes?

Qualifying charitable purposes include:^[2]

Use in furtherance of the charitable purposes — e.g. a community centre, school, or place of worship
Use as an investment — where the property is held as an investment to generate income for the charity
Use as functional property — offices, warehouses, or other operational premises used by the charity

The charity does not need to physically use the property itself — holding it as a rental investment to generate income for charitable work also qualifies.

Important: If the charity purchases the property partly for charitable purposes and partly for non-charitable purposes, partial relief may be available. The relief applies only to the portion attributable to charitable purposes.

Joint Purchases with Non-Charities

If a charity buys property jointly with a non-charity (e.g. a joint venture), the relief only applies to the charity’s share. SDLT is charged at the normal rates on the non-charity’s share of the consideration.^[2]

Withdrawal of Relief

HMRC can withdraw charity relief if, within 3 years of the purchase (the “control period”):^[3]

The purchaser ceases to be established for charitable purposes
The property (or any interest in it) is used otherwise than for qualifying charitable purposes
The property is sold or transferred to a non-charity (otherwise than by way of a gift) without being held for charitable purposes

If relief is withdrawn, the full SDLT that would have been payable without the relief becomes due, plus interest from the original transaction date.

How to Claim

Charity relief is claimed on the SDLT return (form SDLT1). The charity’s solicitor or conveyancer will:^[1]

Confirm the purchaser is a registered charity
Confirm the property will be held for qualifying charitable purposes
Include the relief claim code on the SDLT return
File the return within 14 days of completion (even though no SDLT is payable)

Tip: Even when charity relief applies and no SDLT is payable, the SDLT return must still be filed. Failure to file within 14 days can result in a £100 penalty, even where the return shows £0 SDLT due.

Frequently Asked Questions

Does charity relief apply to all property purchases?

It applies to all property purchases by qualifying charities, provided the property is to be held for qualifying charitable purposes. This includes residential and commercial property, and applies regardless of the purchase price.

What are qualifying charitable purposes?

Qualifying charitable purposes include using the property for the charity’s charitable activities, as an investment to generate income for the charity, or as functional property (e.g. offices, warehouses). The property must be used to further the charity’s charitable objects.

Can a charity lose the relief after claiming it?

Yes. If the charity ceases to use the property for charitable purposes, or the charity ceases to be established for charitable purposes, within 3 years of the purchase, HMRC can withdraw the relief and the full SDLT becomes payable.

Does the relief apply to housing associations?

Many housing associations are registered charities and can claim charity relief. However, not all registered providers of social housing are charities. Those that are not charities may have access to other reliefs instead.

Sources

SDLT: charities relief — GOV.UK
SDLTM27000 – Reliefs: charities relief — HMRC
Finance Act 2003, Schedule 8 — legislation.gov.uk