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SDLT Relief on Acquisition by Property Traders from Personal Representatives

Stamp Duty Land Tax (SDLT) is generally payable on the acquisition of land and property in England and Northern Ireland. However, specific reliefs may apply in certain circumstances.

One such relief is available where a property trader acquires residential property from personal representatives (PRs) of a deceased person. This relief can significantly reduce or eliminate SDLT liabilities and is particularly relevant for property developers who purchase inherited property for resale.

What is the Relief?

This relief is designed to facilitate the efficient transfer of property from estates into the market. Where a qualifying property trader purchases a property from PRs, the transaction may benefit from an SDLT exemption, provided certain conditions are met.

In essence, the relief recognises that such transactions are part of a trading activity rather than long-term investment and therefore reduces the SDLT burden to avoid discouraging redevelopment and resale.

Key Conditions

To claim the relief, all the following conditions must be satisfied:

·The dwelling is acquired in the course of a business that consists of or includes acquiring dwellings from personal representatives of deceased individuals.

·The deceased individual occupied the dwelling as their only or main residence at some time in the two years ending with the date of their death.

·The property trader does not intend to spend more than the permitted amount on refurbishment of the dwelling.

·The property trader does not intend to grant a lease or licence of the dwelling, or to permit any of its principals or employees (or any person connected them) to occupy the dwelling.

·The area of land acquired does not exceed the permitted area.

For these purposes, the legislation defines:

·‘Property trader’ as either a company, LLP or a corporate partnership.

·‘Refurbishment’ as works that enhance the value of the dwelling, not including cleaning or works required solely for the purpose of ensuring that the dwelling meets minimum safety standards.

·‘Permitted amount”, as the higher of £10,000, or 5% of the consideration for the acquisition of the dwelling, but subject to a maximum of £20,000.

·‘Permitted area’ as, generally, 0.5 of a hectare.

If the conditions are not met, SDLT will be payable at the standard residential rates, including possible surcharges

How We Can Help

Determining eligibility for SDLT relief can be complex and fact-specific. As your advisers, we can:

·Assess whether your transaction qualifies.

·Structure acquisitions to maximise tax efficiency.

·Prepare and submit SDLT returns correctly.

·Support you in dealing with HMRC queries.

Further information

More information on this relief can be found in HMRC’s SDLT manual:

SDLTM21040 - Reliefs: Certain acquisitions of residential property - HMRC internal manual - GOV.UK