Charities need to be aware of the potential SDLT liabilities where the entire land/building is not to be retained for charitable purposes. There is no partial exemption from SDLT: the transaction is either fully exempt or fully chargeable.

Therefore, the transaction will either qualify for the relief or it will be liable to SDLT at the appropriate rate. However, where the charity intends to hold the ‘greater part’ of the land for qualifying purposes, the transaction will be exempt from SDLT. The ‘greater part’ is taken to mean that 51 per cent or more of the monetary value of the land is being retained by the charity.

Trading subsidiary companies do not benefit from any exemption from SDLT and, therefore, wherever possible land should be purchased by the charity. Transfers of property from a charitable company to a trading subsidiary may qualify for SDLT group relief, meaning that no SDLT is chargeable on the transfer, but careful structuring may be needed to achieve this successfully.