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SDLT: Stamp Duty Land Tax Surcharge On Derelict Properties

Are you due a rebate?

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Posted by Helen Beaumont on 24/06/2020 @ 8:00AM

If you've bought a derelict property since March 2016, you may be due a refund if you paid an SDLT surcharge on the purchase of that property ...

You may be due a rebate for the Stamp Duty Land Tax surchage on your derelict property purchase!

You may be due a rebate for the Stamp Duty Land Tax surchage on your derelict property purchase!

copyright: zagzig / 123rf

The Government introduced the Stamp Duty Land Tax surcharge on purchases of additional residential properties by individuals and any purchases made by a company on 1st April 2016. At a recent tribunal, PN Bewley Limited contested the SDLT surcharge, stating that it should not be payable if the property was uninhabitable at the time of the purchase.

"This means that developers, purchasing a derelict property may have overpaid tax!"

A derelict property is one that someone can't live in. Although services such as gas and water were connected, the interior piping had been removed, as had the floorboards. In addition, asbestos had been discovered, meaning no-one could legally live there, even if everything else was in working order.

The tribunal was asked to consider the question of if the property was suitable for use as a dwelling at the time of the purchase, and they concluded that no it was not. Although the judges did not provide examples of what would render a property habitable, it did consider HMRC's own literature in order to make its assessment.

So, therefore, as it wasn't possible for someone to live in the property at the time of the purchase, the building was classed as derelict, and consequently, no SDLT surcharge was due.

Of course, the facts will have to be examined on a case-by-case basis. Still, if you're in the process of purchasing a property that you consider to be uninhabitable, then you could apply to HMRC and present evidence regarding the condition of the property.

This evidence could include photographs, surveys, insurance reports and quotes for work to be done; maybe even eye-witness accounts to prove that the developer didn't do this themselves to get out of paying the SDLT surcharge.

"The Stamp Duty Land Tax surcharge was designed to discourage ownership of second properties!"

Incentives are somewhat reversed now, and for that reason, combined with the potential loss of revenue, the Government may seek to close the loophole soon. If you're thinking of purchasing a derelict property, then now may be the optimum time to do it.

Until next time ...



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About Helen Beaumont ...


Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.

Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.

When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.