We understand that HMRC have raised a number of enquiries into SDLT returns where the lower mixed use rates of SDLT have been paid on acquisitions, which HMRC consider are solely residential land. This appears to be an ongoing area of interest for many HMRC inspectors.
The SDLT rates for residential property are up to 12% (where the price exceeds £1.5m), or 15% (e.g. if the price exceeds £1.5m and the property is a second home; or, the purchaser is corporate). Whereas the maximum SDLT rate for non-residential or mixed use property (comprising residential and non-residential elements) is 5%.
A purchaser may acquire some residential property (e.g. a house) and, as part of the same transaction, some non-residential land, such that their acquisition is ‘mixed use’. This may be subject to the lower mixed use SDLT rates.
However, this positive SDLT outcome turns on whether the the land is in fact non-residential. There is no definition of non-residential property, but this is determined by whether the property is within the official definition of ‘residential’ i.e:
- a building that is used or suitable for use as a dwelling (or is in the process of being constructed or adapted for such use),
