Stamp Taxes Newsletter: February 2023

HMRC have released a Stamp Taxes Newsletter in February 2023. This is our enhanced version with links to more detailed guides.

Rates and Thresholds

From 23 September 2022 - 1 April 2025

• The nil rate threshold increases to £250,000.
• The nil rate threshold for first-time buyers increases to £425,000 and the maximum that can be paid for a qualifying property increases to £625,000.

From 1 April 2025 thresholds will return to pre-23 September levels.

See: SDLT: At a glance, Stamp Duty Land Tax, rates & allowances

Higher rates of Stamp Duty Land Tax (SDLT) for additional dwellings

Higher rates of SDLT can be reclaimed if a main residence is sold within three years of the acquisition of a new main residence.

• The three-year time limit can be extended in exceptional circumstances.
• HMRC have provided further examples of circumstances they would consider exceptional.

See: SDLT: Residential property higher rates

Annual Tax on Enveloped Dwellings (ATED)

A new relief from the 15% rate of Stamp Duty Land Tax is available under the Homes for Ukraine Sponsorship Scheme.

See: SDLT: Residential property higher rates

See: Annual Tax on Enveloped Dwellings (ATED)

Recent cases

Upper Tribunal

Ladson Preston Limited v HMRC
In Ladson Preston Limited, AKA Developments Greenview Limited v HMRC [2021] TC08197, the First Tier Tribunal (FTT) held that planning permission was not capable of satisfying the requirement of being 'in the process of construction' in order for Multiple Dwellings Relief (MDR) to apply.

HMRC v Christian Peter Candy
In HMRC v Christian Peter Candy UKUT 0170, the Upper Tribunal (UT) allowed HMRC's appeal, finding an SDLT return could not be amended outside the standard 12-month window. It denied a multi-million-pound Stamp Duty Land Tax (SDLT) repayment.

Andrew and Tiffany Doe v HMRC
In Andrew & Tiffany Doe v HMRC [2022] UKUT00002, the Upper Tribunal (UT) endorsed the FTT decision that a residential property purchase did not represent the purchase of two separate dwellings on which Multiple Dwelling Relief (MDR) for Stamp Duty Land Tax (SDLT) could be claimed. The taxpayer's appeal was dismissed.

Hyman and Goodfellow v HMRC
In (1) David Hyman and Sally Hyman (2) Pensfold (3) Craig Goodfellow and Julie Goodfellow v HMRC [2021] UKUT0068, the Upper Tribunal (UT) considered the definition of residential property and determined that residential rates of Stamp Duty Land Tax (SDLT) should apply to the purchase of three different properties that all included substantial plots of land.

Oisin Fanning v HMRC
In Oisin Fanning v HMRC [2022] UKUT 00021, the Upper Tribunal dismissed an appeal against a £250,000 assessment for Stamp Duty Land Tax (SDLT), confirming that a sub-sale relief tax avoidance scheme used failed to meet the qualifying conditions for the relief to work.

Stuart Fox v HMRC
In Stuart Fox v HMRC [2022] UKUT00310, the Upper Tribunal (UT) found that a Stamp Duty tax avoidance scheme involving the transfer of a property from a wife to her husband failed because they were connected, as such he was liable for the entire tax liability.

Brown and Anor v HMRC
In Michael & Bridget Brown v HMRC [2022] UT00298, the Upper Tribunal (UT) confirmed that a stamp duty sub-sale avoidance scheme under which a company incorporated to purchase a property and transferred it to its individual owners by way of a capital reduction did not avoid any tax. The subscription price of their shares formed a consideration for the property.

FTT Decisions

Gary Withers v HMRC
In Gary Withers v HMRC [2022] TC08649, the First Tier Tribunal (FTT) found that land purchased with a dwelling house was not a residential property for SDLT purposes. A longstanding grazing license and agreement with the Woodland Trust gave the land a separate function other than a garden and grounds.

Nael Khatoun v HMRC
In Nael Khatoun v HMRC [2021] TC08085, the First Tier Tribunal (FTT) found that the purchase of a residential property with access to a communal garden was subject to residential rates of Stamp Duty Land Tax (SDLT) and not mixed-use rates.

Clearances

SDLT Non-Statutory Clearances are available where the application of the law to a transaction is genuinely uncertain.

See: SDLTM51000

Multiple Dwelling Relief guidance

HMRC have updated their guidance to explain their approach when considering the number of dwellings involved in a property purchase. It revolves around how many dwellings would an ‘average observer’ consider are included in the purchase.

See:  SDLT Residential Property & dwellings

See:  SDLT: Multiple Dwelling Relief (MDR)