SDLTM09740 - SDLT - higher rates for additional dwellings - higher rates transactions - Para 3 Sch4ZA FA2003

(Please note that this page was signficantly amended on 13 November 2020)

The higher rates of SDLT will apply to any purchase of a major interest in a dwelling or dwellings which鈥痬eets鈥痶he definition of a 鈥渉igher rates transaction.鈥� A 鈥渉igher rates transaction鈥� is a transaction which meet the conditions set out in any of Paras鈥�3鈥痶o 6鈥痮f Sch4ZA FA2003. These conditions are covered in detail听at SDLTM09765 辞苍飞补谤诲蝉.鈥赌�

鈥疉 major interest in a single dwelling means freehold or leasehold ownership of that dwelling. It听includes an听undivided share in a major interest in a dwelling [Para 2(5)].鈥�疘n addition, a leasehold interest must have been originally granted for a term of more than seven years to comprise a major interest in land [Para 2(4)].鈥赌�

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A leasehold interest originally granted for 100 years but with only four years left before it expires will be treated as a major interest in land for the purposes of the higher rates rules.鈥赌�

A leasehold interest originally granted for six years with all six years left to run will not be treated as a major interest in land for the purposes of the higher rates rules.鈥赌�

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What is not a鈥�渉igher rates transaction鈥濃��������

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The following transactions will not comprise higher rates transactions and the higher rates will not鈥痑pply. Purchases鈥痮f: -鈥��

  • 鈥齨on-residential or mixed residential and non-residential properties, except for a transaction which incorporates more than one dwelling, when
  1. a 'Multiple Dwellings Relief' claim is made in respect of the residential element of the transaction, and
  2. the non-residential element of the transaction is negligible or artificially contrived.

(See SDLTM29900 for more details on 'Multiple Dwellings Relief')

  • property where the consideration given is less than 拢40,000 [Paras 3(2), 4(c), 5(2), 6(1)(c) and 7(1)(c)]; and
  • caravans, houseboats and mobile homes.

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Caravans, houseboats and mobile homes are usually chattels听and any payment in respect of the plot is usually for a听license;鈥齮hey听are therefore not usually chargeable to SDLT.鈥���

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If a moveable asset of this type becomes sufficiently fixed to the land to become part of the land then we would no longer consider it to be a caravan, mobile home or houseboat. In such cases, the resulting building or structure may be a dwelling if it meets the normal definition. More detailed guidance is found at SDLTM10023.鈥赌�

If there is uncertainty as to听whether HMRC would regard the non-residential component of a mixed transaction as negligible in determining听whether the transaction听comprises a higher rates transaction, a clearance application can be made in accordance with the non-statutory clearance service offered by HMRC. A link to the Gov.UK guidance on non-statutory clearances can be found听HERE听

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Exception for鈥痗ertain鈥痯urchases by companies 鈥� Sch4A FA2003鈥��

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The higher rates will not be charged on purchases that are charged at the 17% rate for purchases of higher threshold interests in dwellings by companies.鈥�(Sch4A FA2003)鈥疕owever, where such a鈥痯urchase includes a chargeable interest that is not a higher threshold interest, the deemed separate transaction in those interests [Para 2(3)鈥疭ch4A FA2003] may be subject to the higher rates if the purchase of those remaining interests meets the conditions.鈥赌�

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