Dwelling or not Dwelling for Stamp Duty Land Tax

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By Fiona Barnwell-Diane



Stamp Duty Land Tax is a complex tax and often legal advisors will find themselves being required to provide advice to clients on the subject despite not being specialists in that area.

The subject of whether a dwelling could ever be non-residential is one which has been explored recently by the First-tier Tribunal case of Amarjeet Mudan and another v HMRC [2023] UKFTT 317.

In this case, the taxpayer was arguing that the property which had been vandalised and needed a lot of renovation works including rewiring, new pipes, new boiler and other elements meant it was not suitable for use as a dwelling and as such non-residential rate should apply.

However, the First-tier Tribunal disagreed and following HMRC’s guidance, stated that unless the dwelling was for example at high risk of collapsing then the dwelling would be residential.

HMRC’s guidance further states that unless the dwelling needs repair work which cannot be undertaken safely due to asbestos for example or there is a high probability of walls collapsing or other hazards are present which would cause a local authority to issue a prohibition notice then the dwelling would still be classed as suitable for use a dwelling and therefore subject to residential rates.

The same guidance notes details that substantial repairs to windows, floors, a roof, unsafe electrical wiring, flood damage or damp proofing being needed for example would not detract away from the ability for that dwelling to be considered suitable for use a dwelling.

The effect of this means that whereas somebody may deem a derelict house, which needs extensive work, as not suitable for use as a dwelling, in fact HMRC would potentially disagree and a higher rate of tax would most likely be payable on the purchase of a run down residential property.