HMRC SDLT: SDLTM00375 – Scope: what is chargeable: land transactions: residential property – special types of accommodation

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 residential property and special types of accommodation. It outlines the principles and concepts involved in determining what constitutes a chargeable transaction.

• Defines chargeable land transactions under UK tax law.
• Explains the criteria for residential property classification.
• Details special types of accommodation and their tax implications.
• Provides examples to illustrate different scenarios.

Understanding Chargeable Land Transactions: Special Types of Accommodation

Mobile Homes, Caravans and Houseboats

When it comes to mobile homes, caravans, and houseboats, it’s important to think about two main aspects: the structure of the living unit and the land it sits on. Each case can be different, and whether they are treated as separate entities will depend on the specific situation and surrounding factors. If you want to read more detailed information, you can refer to SDLTM10023.

Holiday Homes

When considering holiday homes, such as holiday chalets or furnished holiday lettings that are rented out for short stays, it’s essential to understand their classification. Though these properties are not used as permanent residences by visitors, they can still be regarded as being ‘suitable for use’ as living spaces. The decision on how these are classified will depend on the specific facts of each situation. For more detailed information on holiday homes, refer to SDLTM00380.

Halls of Residence and Other Student Accommodation

Student accommodation can fall into two main categories: residential and non-residential. This classification depends on whether the property is seen as a dwelling or not. There are three main types of student accommodation:

• Halls of residence: These are always classified as non-residential. According to section 116(3)(b) of the Finance Act 2003, they do not qualify as dwellings.
• Residential accommodation for students: This includes all student housing other than the halls of residence. For the purposes of sections 55, 116, and Schedule 6B, this type of accommodation is seen as a dwelling. However, it is not considered a dwelling for the purposes of Schedule 4A, 4ZA, and 6ZA.
• Ordinary residential properties: If these are let to students, they are always considered dwellings under section 116(1)(a). This means they are classified as residential property for Stamp Duty Land Tax (SDLT) purposes.

For more in-depth details regarding student accommodation, please refer to SDLTM00377.

Hotels, Inns, Bed and Breakfasts and Similar Establishments

When evaluating properties such as hotels, inns, or bed and breakfast establishments, each situation is assessed on its own merits. For instance, a bed and breakfast that provides essential facilities like bathing options and telephone lines in each room, and is open all year, is generally classified as non-residential. This classification aligns with section 116(3)(f), which describes these types of establishments as not being used as dwellings.

Example Scenarios

– If you purchase a mobile home that is located on a rented plot of land, the assessment may involve determining whether the mobile home can be seen as a separate entity from the land it occupies. The circumstances, such as the length of time and ownership of the land, will inform the decision.

– If a holiday chalet is rented out throughout the summer but remains empty in the winter months, this property may still be considered suitable for use as a dwelling. However, whether it is classified as such affects its Stamp Duty Land Tax implications.

– In a situation where a university provides accommodation for students in a purpose-built hall, that hall will never be classified as a dwelling for Stamp Duty purposes, making it easier for the institution to manage tax implications.

– If you own a guest house that caters to long-term stays and provides all necessary amenities throughout the year, it might fall into the non-residential category. Being classified as non-residential simplifies the tax obligations related to Stamp Duty.

Understanding Dwellings and Non-Dwellings

The distinction between dwellings and non-dwellings has significant implications for Stamp Duty Land Tax. Below are a few important points to note:

• Dwellings are typically properties where people live on a permanent basis. Examples include family homes or flats that people rent out for long periods.
• Non-dwellings are properties that do not serve as primary residences. This category includes hotels, inns, and student accommodation that are not considered dwellings.

The purpose of classifying properties is to determine tax obligations and how they are treated under the law. Tax benefits or exemptions may apply differently depending on the status of the property.

Further Guidance

To navigate the complexities of land transaction classifications effectively, reference materials can provide useful insights. Each category of accommodation has its own set of criteria influencing how they are taxed.

– For mobile homes, look at SDLTM10023 for specific instructions and clarifications.
– For guidance on holiday homes, the reference is SDLTM00380.
– For student accommodation regulations, consult SDLTM00377.

This framework informs property buyers and sellers about their tax liabilities and responsibilities when involved in transactions concerning different types of accommodation. Understanding these principles can help in making informed decisions that comply with tax laws and regulations.

Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: SDLTM00375 – Scope: what is chargeable: land transactions: residential property – special types of accommodation

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