HMRC SDLT: Determining Land as Garden or Grounds: Layout and Use Considerations for Tax Purposes
Understanding Chargeable Land Transactions: Garden or Grounds
This guidance explains how to determine if land is considered ‘garden or grounds’ for tax purposes. The layout of the land and any outbuildings play a crucial role in this assessment. Land that supports domestic enjoyment is typically classified as ‘garden or grounds’, whereas land used for commercial activities is not.
- Land suitable for daily domestic enjoyment is likely ‘garden or grounds’.
- Domestic outbuildings and leisure areas indicate ‘garden or grounds’.
- Small orchards, stables, and paddocks for leisure suggest ‘garden or grounds’.
- Commercial farming or horticulture suggests the land is not ‘garden or grounds’.
- Commercial woodland and equestrian use indicate non-domestic land.
- Any commercial use generally means the land is not ‘garden or grounds’.
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Read the original guidance here:
HMRC SDLT: Determining Land as Garden or Grounds: Layout and Use Considerations for Tax Purposes
Understanding What is Considered Garden or Grounds in Land Transactions
This information was first published on 25 June 2019 and aims to clarify what counts as ‘garden or grounds’ concerning land transactions.
Importance of Layout in Recognising Garden or Grounds
The way land is arranged plays an important role in determining whether it can be classified as ‘garden or grounds.’ If the layout is designed for everyday enjoyment by the residents of the property, it is likely that it qualifies as ‘garden or grounds.’
Indicators of Garden or Grounds
Several features can suggest that a piece of land should be classified as ‘garden or grounds.’ These include:
- Domestic outbuildings that are used for personal purposes, such as sheds or garages.
- Designated areas for leisure activities or hobbies, like patios or flower beds.
- Small orchards where fruit trees are cultivated for personal consumption.
- Stables and paddocks that are suited for leisure activities, such as keeping horses for personal use.
If any of these elements are present, the land is likely to be considered as ‘garden or grounds.’ Each aspect indicates that the land is oriented towards personal enjoyment rather than commercial use.
Indicators of Commercial Use
On the other hand, if the land is set up to support business operations for profit, it is less likely to be classified as ‘garden or grounds.’ Examples of such use include:
- Commercial farming or horticulture, where land is used to grow crops for sale.
- Commercial woodland that is maintained and harvested for profit.
- Commercial equestrian use, such as livery stables that provide horse-keeping services for a fee.
- Any other activities that are primarily aimed at generating income.
The presence of these features indicates a business-oriented use of the land, which distinguishes it from land that is purely for personal enjoyment.
Assessing Mixed-Use Land
It is important to note that land can sometimes have elements of both ‘garden or grounds’ and commercial use. When assessing such land, it is necessary to weigh the primary purpose of the land usage. Consider the following:
– If the land primarily serves personal needs, even if there are some commercial aspects, it may still be classified as ‘garden or grounds.’
– Conversely, if the predominant use is for business, that would take precedence in classification.
Conclusion on Classifications and Regulations
Understanding these classifications is essential for anyone involved in land transactions. The layout and features play a fundamental role in determining how the land is assessed for tax reasons. It is advisable to consult with a professional if there is any uncertainty regarding the classification of specific parcels of land.
Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: Determining Land as Garden or Grounds: Layout and Use Considerations for Tax Purposes
