Definition of dwellings for SDLT purposes

Definition of dwellings for SDLT purposes

With a significant difference in the rates applicable to residential and non-residential properties it is important to be able to identify the appropriate classification, since there could be substantial tax at stake.

While this may seem a straightforward matter in most cases, there are many instances, such as farms and rural estates where the classification can be problematic. HMRC have recently published new guidance in the Stamp Duty Land Tax Manual (SDLTM000360-SDLTM00430) which clarifies the current thinking on the factors which need to be taken into account in deciding whether a property is “residential” or “mixed use”.

This is particularly important for those advising clients on property acquisitions, in deciding the correct basis for completing the SDLT Return. There are also other rules which need to be considered, including:

  • the potential to claim Multiple Dwellings Relief
  • the treatment of 6 or more residential properties, purchased in a single transaction, as “non-residential”
  • application of the 15% rate on purchases over £500,000 by companies and
  • whether the “standard” rate of SDLT or the “higher” rate for purchases of additional residential property should apply

Should you have any queries on this definition or how HMRC’s new guidelines may affect you, then please contact Pauline Hudd.

Pauline Hudd
Partner at Wilder Coe
Pauline provides clients with practical advice and pragmatic solutions in relation to all aspects of stamp taxes. Her wide-ranging experience on corporate and real estate transactions means that she gives bespoke advice tailored to the needs of clients, whether they are major multi-nationals, financial institutions or individual investors.