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Stamp Duty Land Tax On Uninhabitable Properties

Potentially good news for developers ...


Posted by Helen Beaumont on 24/03/2021 @ 8:00AM

Another day, another taxpayer at a tribunal. This time, due to the purchase of a dilapidated bungalow. HMRC demanded an extra £7,500 in Stamp Duty Land Tax ...

copyright: jdkooper / 123rf

It was January 2019 where the courts decided in favour of the taxpayer in the case of HMRC vs PN Bewley Limited. It was obvious to anyone who saw the property that it couldn't be lived in, but that didn't stop HMRC from arguing that more Stamp Duty Land Tax (SDLT) was due.

"After setting up a company, Mr and Mrs Bewley purchased a bungalow for £200,000!"

It was in a serious state of disrepair and was riddled with asbestos. Most of the roof was missing, it didn't even have floorboards, and all the windows were broken. They intended to completely demolish it and build a new property on the plot.

Their solicitors submitted an SDLT1 return to HMRC because the bungalow was a residential property. In addition, the company had to pay the 3% higher rate charge. However, the Bewley's argued that as the bungalow was uninhabitable, non-residential rates should have applied instead.

The Bewley's took a good case to the First-Tier Tribunal. Apart from professional reports and other testimonials, the photographs they supplied about the state of the property at the time of purchase convinced the Tribunal to decide in their favour.

"HMRC was forced to reclassify the purchase
as non-residential!"

This meant there was a lower SDLT liability so the purchase was not subject to the additional 3% higher rate charge usually applied to companies who buy residential property.

Tribunals are not binding, but HMRC has not appealed the decision; however, the takeaway here is that developers could now potentially purchase derelict properties and pay a lower rate of Stamp Duty Land Tax.

However, each case is different so seek professional advice first.

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.