Stamp Duty Land Tax (SDLT) is charged to the buyer on the acquisition of land in England and Northern Ireland. With the rates for SDLT typically being greater for residential land, there is an incentive for property to be deemed non-residential for tax purposes. In the case of Hyman, Pensfold, & Goodfellow v HMRC [2021], the Upper Tribunal upheld the rulings of the First-Tier Tribunal and found that land bought together with a house formed part of the garden and grounds. Therefore, the residential rates of SDLT applied on the full purchase price with no reductions given for the fact that the houses were acquired with a substantial amount of land. Background The Upper Tribunal considered three cases all with similar background f...

Only/Main Residences If you sell a property which is your only residence and has been your only home throughout your period of ownership, you will not be required to pay Capital Gains Tax ("CGT") if a capital gain arises on the disposal. This is because Private Residence Relief ("PRR') is available for the full period of ownership, reducing any chargeable capital gains to nil. This also applies if you own several residences and have elected for one to be your main residence for PRR purposes (please see our previous article Principle Private Residence "PRR" Elections: Your Options for further details of this). Additional Residences Furthermore, if you sell a property which is not your main residence at the date of disposal but...

Stamp Duty Land Tax (SDLT) is payable on the acquisition of land and property over a certain price in England and Northern Ireland. Different taxes apply if the land/property is located in Scotland (Land and Buildings Transaction Tax) or Wales (Land Transaction Tax). The tax payable is calculated using tax bands. Where the price/consideration for a property is higher, portions of the consideration may be subject to SDLT at progressively higher rates of SDLT. As a result of Covid-19, the government has confirmed that the residential rates of SDLT for property transactions between 8 July 2020 and 31 March 2021 are as follows: Property or lease premium or transfer value SDLT rate Up to £500,000 Zero The next £425,000...

On the sale of a house that you have lived in as a main residence, Principal Private Residence (PPR) Relief is typically available to reduce the gain by reference to your ownership period and the length of time that the house has been occupied as your main residence. PPR Relief applies to both the site of property and its surrounding gardens and grounds, provided that the total area does not exceed 0.5 hectares. Should the site exceed 0.5 hectares, relief may still nevertheless be available if it can be demonstrated that the larger area is required for "the reasonable enjoyment of the dwelling house . . . as a residence, having regard to the size and character of the dwelling house". In the recent case of Leslie and Catherine Phillip...

HMRC plans to send 14,000 "nudge" letters to individuals it believes may have made a taxable residential property disposal in 2018/19 but did not report it on their self-assessment tax return, thereby encouraging taxpayers to come forward and bring their affairs up to date. On the sale of residential property, capital gains tax may become payable on the gain. The taxable gain is calculated by taking the sale proceeds and deducting the original cost, the associated costs of disposal/acquisition, any costs incurred on enhancing the value of the property, and the annual exempt amount (£11,700 for 2018/19). If the taxpayer had lived in the property as their main residence throughout their period of ownership, then Principal Private Resid...

With the offer of quality accommodation at a cheap price and a convenient online booking system, Airbnb has become a very popular choice for those looking for somewhere to stay during a weekend away or even an extended holiday. The increased popularity of the site has created a great opportunity for those with an apartment or spare room to easily generate some extra income. However, these people may not have earned money in this way before and they may therefore not be aware that this is taxable rental income that they may need to report to HMRC. Airbnb has just announced that it will provide HMRC with the details of the individuals who let out property on the site and the rental income that they have received. The information provide...

When looking at the capital gains tax (CGT) position following a disposal of an asset, it is important to understand that CGT follows the beneficial interest in the property (as opposed to the legal title). Establishing the owner(s) of the beneficial interest should be considered on a case-by-case basis. The case of Asif Bhikhi v HMRC (2020) demonstrates the importance of properly documenting transfers of property which can often be overlooked in transactions between family members. In this case, the First-Tier Tribunal (FTT) held that there was insufficient evidence to demonstrate that the appellant retained their beneficial ownership of a property on a transfer. In any case, even if there had been an implied trust in place, the transfe...

Private residence relief (PRR) provides relief from capital gains tax (CGT) on the disposal of a property that has been used as your main home during the period of  ownership. In the recent First Tier Tribunal (FTT) case of Hashmi v HMRC, the tribunal found that Mrs Hashmi (the taxpayer) had failed to satisfy the burden of proof required to show that the properties that she lived in were her private residences, and therefore eligible for private residence relief. The case provides insight into the level of proof that is required to support a claim for private residence relief for a property. Background Between 2013 and 2015, the taxpayer lived in the following properties, for the following periods:  132 Shaggy Calf Lane unt...

If you build yourself a new home or if you convert a non-residential building into a home for you or your relative to live in as a main residence, you may be able to claim a VAT refund on building materials and services. In order to be eligible for a refund, you must make a claim with HM Revenue & Customs (HMRC) no later than 3 months after the "completion" of the building. P Wedgbury & S Wedgbury v HMRC - The Definition of "Completion" The term "completion" is unfortunately not clearly defined in the legislation. However, in the recent case of P Wedgbury & S Wedgbury v HMRC (2020) the First-Tier Tribunal (FTT) considered the meaning of "completion" and therefore provides a useful guide for taxpayers who are looking to...

This article will cover the Stamp Duty Land Tax “SDLT” relief that may be available to you if you purchase a subsidiary dwelling alongside a principal dwelling. Normally if you purchase an additional residential property which will not be used as your main residence, an SDLT surcharge may be applicable. The surcharge increases the basic rates of SDLT by 3%, meaning that more SDLT will be payable. However, a purchase of more than one dwelling may be treated as the purchase of a single dwelling for SDLT purposes if one or more of the dwellings is subsidiary to the principal dwelling. This is applicable if: The subsidiary dwelling is within the same building as, or in the grounds of, another dwelling purchased in the same transa...