HMRC SDLT: SDLTM00460 – Scope: what is chargeable: land transactions: garden or grounds – use

Principles and Concepts of Chargeable Land Transactions

This section of the HMRC internal manual provides guidance on the scope of chargeable land transactions, specifically focusing on the use of garden or grounds. It outlines the principles and concepts that determine what is considered chargeable. Key points include:

• Definition of chargeable land transactions.
• Criteria for determining the chargeability of garden or grounds.
• Examples of transactions that fall within this scope.
• Relevant legal frameworks and guidelines.

Determining Whether Land is Garden or Grounds

Use of Land as a Key Factor

When deciding if a piece of land is considered ‘garden or grounds’, one important aspect to consider is how the land is being used. The law intends to differentiate between land used for residential purposes and land used for commercial purposes. If the land is used primarily for business rather than a home, it’s likely not classified as ‘garden or grounds’.

Commercial vs Domestic Activities

It’s important to note that various activities can be seen as either domestic or commercial based on specific details. HM Revenue and Customs (HMRC) usually looks for evidence of these activities to make a decision.

Some common examples include:

– Beekeeping: This can be a hobby or a substantial business. If someone keeps bees as a leisure activity, the land might still be considered part of the ‘garden or grounds’. However, if beekeeping is done on a significant scale, it leans towards being a commercial use.

– Grazing: If livestock are kept purely for enjoyment, it may still be considered ‘garden or grounds’. In contrast, if the livestock are managed as part of a business, then that land would generally not qualify as ‘garden or grounds’.

– Equestrian Activities: Similar to land used for grazing, if horses are kept for personal enjoyment, that land can still be counted as ‘garden or grounds’. However, if horses are used for riding lessons or competitions on a regular basis, this suggests commercial use.

Parklands and Their Uses

Sometimes, land may serve multiple purposes. For instance, parkland that is grazed by livestock but mainly serves as a beautiful setting for a home might still be considered part of the ‘garden or grounds’. However, if the same land is used commercially to keep livestock, it is much less likely to be viewed as ‘garden or grounds’.

Additionally, if the land contributes to an esteemed view from the home, figuring out how the land is used can help clarify its classification.

Leases and Occupancy

If a lease is granted to someone else to exclusively occupy a piece of land, this might imply that the land is not used for residential purposes anymore. However, occasionally allowing others to use the land does not automatically exclude it from being called ‘garden or grounds’. To assess this accurately, HMRC will need to look deeply into the specifics of any lease or licence, including when it started and how long it lasts.

Types of Land and Their General Classifications

Some types of land tend to fall into specific categories unless proven otherwise. For example:

– Paddocks and Orchards: These are usually regarded as part of the residential area unless they are actively used for business regularly.

– Fallow Fields: If a field is normally used for growing crops but is left fallow for a time, it doesn’t mean it has transformed into ‘garden or grounds’. Leaving a field fallow is a common practice in farming and doesn’t change the land’s intended use.

Farming machinery may have worked on the land for years, which would further indicate that it is used for agriculture, rather than for gardening or recreation.

Assessing Land Usage as Residential or Commercial

In assessing whether land is used for residential or commercial purposes, consider the volume and regularity of activities taking place. The more frequent and serious the use, the more likely it is that HMRC will conclude it is not ‘garden or grounds’.

Here are some considerations:

– Frequency of Use: Land used for leisure activities, like casual gardening or a small vegetable patch, is more likely to be classified as ‘garden or grounds’.

– Scale of Operations: If activities are regularly carried out on a larger scale, such as a fully operational farm, this suggests a commercial use.

– Evidence Required: HMRC may ask for proof of how the land is used. This could be in the form of sales records, business registrations, or usage patterns.

Visual and Aesthetic Factors

The visual appeal of the land can also be significant. Land that is maintained primarily for its aesthetic contribution to a residential property is likely regarded as ‘garden or grounds’. For instance:

– Landscaping: If land is meticulously maintained for a garden, it would strongly support its classification as ‘garden or grounds’.

– Viewpoint Value: If land provides a fantastic view from the residential property and is used mainly to enhance the beauty of the surroundings, this also adds weight to its classification as ‘garden or grounds’.

Summary of Indicators for ‘Garden or Grounds’

In deciding if land qualifies as ‘garden or grounds’, look for these features:

– Purpose: Primarily domestic uses suggest it is ‘garden or grounds’.

– Occupancy: If the land is leased on a regular basis to others, it may be non-residential.

– Commercial Activity: Regular and substantive commercial use decreases the likelihood of land being ‘garden or grounds’.

– Evidence of Use: Documentation of land activities can support or weaken claims for specific classifications.

Understanding these principles can help in evaluating whether land falls under ‘garden or grounds’ or is being used for other purposes. The final decision depends on assessing all these aspects accurately.

Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: SDLTM00460 – Scope: what is chargeable: land transactions: garden or grounds – use

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