HMRC SDLT: SDLTM00370 – Scope: what is chargeable: land transactions: Disadvantage Area Relief (DAR) mixed-use property FA03/SCH6/PARA6
Disadvantage Area Relief (DAR) for Mixed-Use Property
This section of the HMRC internal manual provides guidance on the scope of chargeable land transactions, specifically focusing on Disadvantage Area Relief (DAR) for mixed-use properties under FA03/SCH6/PARA6. It outlines the principles and concepts related to the application of DAR.
- Explains the criteria for qualifying for Disadvantage Area Relief.
- Details the types of mixed-use properties eligible for relief.
- Describes the calculation methods for applying the relief.
- Provides examples and case studies for clarification.
Understanding Disadvantage Area Relief (DAR) and Mixed-Use Properties
What is Disadvantage Area Relief (DAR)?
Disadvantage Area Relief (DAR) is a type of stamp duty relief aimed at encouraging development in areas that are less economically advantaged. This relief helps reduce the stamp duty that buyers must pay when purchasing mixed-use properties in specified areas.
Key Principles of DAR
– Targeted Areas: DAR is available specifically in designated disadvantaged areas, which are identified by the government. These areas are usually those with lower economic activity or high levels of deprivation.
– Mixed-Use Properties: The relief applies to properties that serve both residential and non-residential purposes. A typical example is a building that contains both shops and residential flats.
Who Can Benefit from DAR?
Anyone purchasing a mixed-use property located in a disadvantaged area may be eligible for DAR. This can apply to:
– Individuals: Someone buying a home with a shop on the ground floor.
– Companies: A business investing in properties that have living spaces along with commercial outlets.
How Does DAR Work?
To qualify for DAR, the following conditions generally apply:
– Location: The property must be in a designated disadvantage area. This is usually confirmed through a specific list provided by HMRC.
– Property Use: The property must have both residential and non-residential components. This can include:
– Shops with living accommodations
– Offices with a small flat above
– Chargeable Transaction: The transaction must be a “chargeable” land transaction. This generally means that it is a sale or transfer of property for a consideration (price paid).
Step-by-Step Process for Claiming DAR
1. Identify the Area: Check if the property is located in a designated disadvantage area by using the official government resources.
2. Review the Property Type: Ensure that the property in question has both residential and non-residential elements.
3. Calculate Stamp Duty: The stamp duty can be calculated with the consideration for DAR applied. This depends on the value of the property and the specific rates applicable.
4. Complete the SDLT Return: When you make your stamp duty land tax (SDLT) return, indicate that you are claiming DAR relief. This is important to ensure you pay the correct amount of tax.
5. Submit the Return: File your return and make the payment for the stamp duty. Remember, failing to accurately claim relief can lead to penalties.
Examples of Mixed-Use Properties
To better understand what qualifies for DAR relief, here are some examples of mixed-use properties:
– A small shop with a flat above: This common arrangement allows a person to run a business while having a place to live. If the property is in a disadvantaged area, the buyer could claim DAR.
– A pub with residential quarters: Many pubs or inns have attached living spaces for the owners or staff. If the pub is situated in a designated area, the owners could benefit from reduced stamp duty.
– An office building with an apartment: Businesses sometimes occupy spaces in large buildings which also have apartments. If the entire structure is in an eligible area, this could point towards relief.
Available Reliefs Under DAR
Under DAR, buyers might apply for two types of relief:
– Full Relief: Buyers may qualify for full relief from stamp duty, meaning they pay nothing if the property value is below a certain threshold.
– Partial Relief: If the property value exceeds this threshold, buyers may still qualify for a reduction in the total stamp duty payable, making it more affordable.
Conditions Affecting DAR Relief
While DAR provides benefits, various conditions may affect eligibility, including:
– Threshold Levels: The government sets specific value thresholds for which relief is available. Ensure to check the current figures as they can change.
– Time of Purchase: Make sure that the purchase falls within the necessary periods outlined by HMRC for claiming the relief.
– Potential Changes in Legislation: Stay updated, as laws around such relief can change, thereby impacting eligibility and processes.
Making an SDLT Return
When making an SDLT return, it’s essential to follow these guidelines:
– Include the Property Value: Report the total consideration paid for the property, including any additional costs or charges.
– Declare the Relief Claim: Clearly state that you are claiming Disadvantage Area Relief in your return.
– Complete Necessary Forms: Use the relevant forms provided by HMRC for declaring any claims related to DAR.
Contact HMRC for Guidance
If you have questions regarding Disadvantage Area Relief or mixed-use property purchases, it is advisable to contact HMRC directly. They provide resources and can help clarify any uncertainties regarding eligibility and the application process.
– Useful Resource: Check out the official HMRC pages on SDLT for the latest information and guidance.
Conclusion about Changes in Legislation
Laws and regulations about DAR and SDLT can change. Always ensure you are working with the most recent information by checking the UK government’s official website or consulting legal property experts.
Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: SDLTM00370 – Scope: what is chargeable: land transactions: Disadvantage Area Relief (DAR) mixed-use property FA03/SCH6/PARA6
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