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Bare Trust purchasing property Stamp Duty?

If a Bare Trust purchases a first time property for a beneficiary is there stamp duty

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Client's son received a large insurance payout which was put into a Bare Trust. Parents (Trustees)  want the Trust to buy a first time house for their son and wonder if the purchase might qualify for first time buyer exemption from stamp duty (on a purchase up to 300,000). Could anyone help? Many thanks.

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17th May 2019 11:47

Do you mean bare trust - or is it, say, a trust for a vulnerable beneficiary?

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20th May 2019 16:10

Thank you Tax Dragon. My client advises it is specifically a Bare Trust. Their "grown up" daughter was involved in an accident and the proceeds of the claim were paid into this Trust with the parents as Trustees. Their daughter the sole beneficiary is studying at University.

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20th May 2019 16:45

If the parents are right (in your shoes, I would either caveat accordingly or want to see the Trust Deed rather than take their word for it – not least because I would expect the solicitors dealing with the purchase to want to see both the Deed and the daughter's request to buy the property, without which I don't see how the parents can make the purchase as Bare Trustees), it's the daughter's money and it will be her house.

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21st May 2019 18:08

If the parents buy a property as bare trustees then the "purchaser" for SDLT is the daughter. If she intends to live in the property as her only or main residence and meets the other conditions then first time buyer's relief is available.
There is an oddity in the legislation if the purchase is to be by way of taking the grant a new lease. For instance if a new flat is being bought. Then bizarrely the first time buyers' relief does not work as the odd rule about trustees taking leases is not displaced for FTB relief (though it is displaced for surcharge purposes). This is all very odd. HMRC agree it is odd, but say the rules are clear that "constructive interpretation" does not get around them.

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to JohnShallcross
22nd May 2019 10:24

JohnShallcross wrote:

There is an oddity...

Thanks for this, JohnShallcross. I like a good oddity but was unaware of this one. I'd like to read more. Do you mind providing a pointer to HMRC's commentary?

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