UK FTT grants SDLT mixed-use discount on land let for grazing

Monday, 05 December 2022
The First-tier Tax Tribunal (FTT) has agreed that Gary Withers' purchase of a barn conversion and its surrounding land was liable to the lower 5 per cent non-residential rates of stamp duty land tax (SDLT) on the basis that the property was mixed use.
Farm tractor

The result is significant for Withers because the SDLT rate applicable to mixed-use transactions, where the land is partly residential and partly non-residential, is only 5 per cent, compared with rates of up to 17 per cent for purchases of wholly residential property.

The property Withers bought amounted to 39 acres and included a barn conversion with a separate dwelling in an annex, a driveway, a lake and gardens, land used by the Woodland Trust charity for rewilding and farmland let out for sheep-grazing. Withers conceded that the house and 12 acres of the land were for residential use, but argued that the land used for rewilding and grazing was commercial. HMRC rejected this claim, so Withers appealed to the FTT.

He showed that a long-term formal agreement was in place to charge a local farmer GBP800-a-year for the grazing rights. Although this amount is relatively low, the FTT accepted that it is not negligible and amounted to a commercial arrangement. Moreover, much of the land was not part of the barn conversion's grounds and most of it could not be seen from the house. HMRC's argument that the land surrounding the dwelling would be suitable for leisure use if there was no commercial use of the land was also rejected. The land subject to the Woodland Trust agreement could be non-residential even if it were not being put to commercial use.

The FTT therefore found that the outlying land was not a residential amenity and the mixed-use rates accordingly applied to the purchase (Withers v HMRC, 2022 UKFTT 00433 TC).

'Although the case does not create binding precedent, taxpayers can be cautiously optimistic that it is possible to successfully argue that property including a dwelling can in some circumstances be mixed use for SDLT purposes', commented law firm Charles Russell Speechlys.

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