Upper Tribunal Tax and Chancery Chamber

UT (Tax & Chancery) UT/2024/000092 - [2025] UKUT 00331 (TCC)

Fecha: 23-Jun-2025

Statutory provisions – SDLT

Statutory provisions – SDLT

SDLT is chargeable on “land transactions”, which are defined in section 43 FA 2003 as the “acquisition of a chargeable interest”. A chargeable interest is defined in section 48 as any estate, interest, right or power in or over land. Section 43(6) provides that where FA 2003 refers to the “subject matter” of a land transaction it is a reference to the chargeable interest acquired:

43 Land transactions

(1)

In this Part a “land transaction” means any acquisition of a chargeable interest.

As to the meaning of “chargeable interest” see section 48.

(2)

Except as otherwise provided, this Part applies however the acquisition is effected, whether by act of the parties, by order of a court or other authority, by or under any statutory provision or by operation of law.

(3)

For the purposes of this Part —

(a)

the creation of a chargeable interest is —

(i)

an acquisition by the person becoming entitled to the interest created, and

(ii)

a disposal by the person whose interest or right is subject to the interest created;

…

(6)

References in this Part to the subject-matter of a land transaction are to the chargeable interest acquired (the “main subject-matter”), together with any interest or right appurtenant or pertaining to it that is acquired with it.

Schedule 4A makes provision for a higher rate of tax on certain transactions involving a “higher threshold interest” which is defined by paragraph 1 as an interest in a single dwelling if the chargeable consideration was more than £2m (since reduced to £500,000). A “high-value residential transaction” is defined in paragraph 2(2) as a transaction where the main subject-matter consists entirely of higher threshold interests. Paragraph 3 makes provision for a charge to SDLT where there is a high-value residential transaction by certain types of purchaser, including where the purchaser is a company. SDLT is chargeable at 15% of the chargeable consideration.

10.

The present appeal is concerned with the effect of paragraph 5 which provides for relief from the higher rate as follows:

5 Businesses of letting, trading in or redeveloping properties

(1)

Paragraph 3 does not apply to a chargeable transaction so far as its subject-matter consists of a higher threshold interest that is acquired exclusively for one or more of the following purposes —

(a)

exploitation as a source of rents or other receipts (other than excluded rents) in the course of a qualifying property rental business;

(b)

development or redevelopment and resale in the course of a property development trade;

(c)

resale in the course of a property development trade (in a case where the chargeable transaction is part of a qualifying exchange);

(d)

resale (as stock of the business) in the course of a property trading business.

(2)

A chargeable interest does not count as being acquired exclusively for one or more of those purposes if it is intended that a non-qualifying individual will be permitted to occupy the dwelling.

(3)

In this paragraph—

…

“property development trade” means a trade that—

(a)

consists of or includes buying and developing or redeveloping for resale residential or non-residential property, and

(b)

is run on a commercial basis and with a view to profit.

11.

Paragraph 5G provides that where relief has been granted, it can be clawed back if certain requirements do not continue to be met for a period of three years after the effective date of the transaction:

5G Withdrawal of relief

(1)

Sub-paragraph (2) applies where relief under paragraph 5 has been allowed in respect of a higher threshold interest forming the whole or part of the subject-matter of a chargeable transaction.

(2)

The relief is withdrawn if at any time in the period of three years beginning with the effective date of the chargeable transaction (“the control period”) a requirement in sub-paragraph (3) is not met.

(3)

The requirements are that —

(a)

the higher threshold interest (if still held by the purchaser) is held exclusively for one or more of the purposes mentioned in paragraph 5(1),

(b)

any chargeable interest derived from the higher threshold interest that may be held by the purchaser is held exclusively for one or more of those purposes, and

(c)

(if the higher threshold interest or a chargeable interest derived from it is held by the purchaser) no non-qualifying individual is permitted to occupy the dwelling.

(4)

The requirements in sub-paragraph (3)(a) and (b) do not apply in relation to times when, because of a change of circumstances that is unforeseen and beyond the purchaser's control, it is not reasonable to expect the purposes for which the higher threshold interest was acquired to be carried out.