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SDLT: What is a non-residential property?

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I appreciate this may not be the best place for such a question, but wondering if anyone has any pointers on how to determine what is or isnt a residential property for SDTL purposes.

Any help is greatly appreciated.

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By trust.pem
15th May 2019 12:54

I think S.116 FA2003 has the definition of Residential Property.

A recent case at (FTT PN Bewley Ltd v HMRC, 2019 UKFTT 0065 TC) noted that the test is whether the building is 'suitable' for use as a dwelling at the point at which the SDLT became payable.

The case was regarding a derelict property which was determined to be non-residential as not a suitable dwelling and the additional rate of SDLT did not apply.

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Replying to trust.pem:
By SouthCoastAcc
15th May 2019 13:25

A big thanks!

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Replying to trust.pem:
By Tax Dragon
15th May 2019 13:44

I'm posting this, hoping that someone will shout me down.

"Residential property" is, as you say, defined. The definition talks about use. "Dwelling" isn't defined, but SDLTM09750 sets out HMRC's understanding.

You will note that (ignoring the extension to property under construction) a residential property is always a dwelling; a dwelling is not always a residential property. Since Sch4ZA seems to apply itself to dwellings, not just to residential properties, why was the FTT troubling itself with s116 in the context of PN Bewley Ltd?

I do hope I am worrying about nothing. (And do you know whether that case has been appealed?)

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Replying to Tax Dragon:
By Justin Bryant
15th May 2019 16:36

You have it the wrong way round.

An inhabitable dwelling (i.e. suitable for use as a dwelling) is always residential property.

However, residential property is not always a dwelling e.g. a bit of my garden sold to my next door neighbour is not a dwelling but is residential property.

Similarly, if I live in a flat and sell a neighbour my loft space that is also not a dwelling but is residential property.

Even PNL knows that much.

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Replying to Tax Dragon:
By Wilson Philips
15th May 2019 16:01

Consider yourself shot down!

Although, in your defence, the use of "a" (as in a property) does make a subtle difference

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Replying to Tax Dragon:
Hallerud at Easter
15th May 2019 16:08

Is it not the reverse?

116Meaning of “residential property”

(1)In this Part “residential property” means—

"a building that is used or suitable for use as a dwelling "

So if a building is used as a dwelling it is Residential Property.

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By Tax Dragon
15th May 2019 17:32

I'm glad to have been shot down, as I said, but bear with me a moment. What I am comparing is s116(1) [DJKL quotes (a) above] and para18(2) of Sch4ZA: "A building or part of a building counts as a dwelling if it is used or suitable for use as a single dwelling or it is in the process of being constructed or adapted for such use." So far so comparable, and (accepting Justin's point that s116(1) also has a (b) and a (c), which don't apply in the Schedule), the two definitions could be defining the same set of properties. (Note that both extracts talk about how a property is used, not what it is.)

But look closer: there are at least two differences (apart from Justin's (b) and (c) point).

First, para18 includes the word "single" – s116 doesn’t. Accordingly, more property is within s116 than is within para18. Buck House might be an example. (So Justin is more right than he realises.)

Second, s116 includes the words: "and 'non-residential property' means any property that is not residential property." There is no similar limitation in para18, and this omission is what was causing me my concern.

But putting the dictionary, Aweb and HMRC's guidance in the SDLT manual (which FTT cited with satisfaction) together, I think I probably was seeing ghosts. Happy enough now. Thanks Justin, Wilson and DJKL.

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