UK and International Tax news
SDLT and Higher Rates Transactions
Monday 30th November 2020
HMRC has recently amended its guidance on the scope of higher rates of SDLT to purchases of additional dwellings.
Higher rates of SDLT, which include the additional 3% surcharge, apply to any purchase of a major interest in a dwelling or dwellings which meets the definition of a higher rates transaction and the conditions set out in paras 3 to 6 of Sch4ZA FA2003.
HMRC ‘s previous guidance was that if a buyer purchased a mix of residential and non-residential property, the higher rates of SDLT would apply where Multiple Dwellings Relief was claimed on the residential elements of a transaction even though the transaction included mixed use property.
HMRC has now confirmed that certain transactions will not comprise higher rates transactions and therefore not be subject to the higher rates of SDLT. These will include purchases of mixed residential and non-residential properties where a Multiple Dwellings Relief claim is made in respect of the residential element of the transaction, and the non-residential element of the transaction is not negligible or artificially contrived.
HMRC’s new guidance however does not define ‘negligible or artificially contrived’ so there could be uncertainty although a purchaser can submit a non-statutory clearance application to HMRC.
Where SDLT has been overpaid on mixed use property transactions in the last 12 months, repayment claims should be considered.
If you would like more information on the above, please contact Keith Rushen on 0207 486 2378.Contact Us