Does being a beneficiary under a trust stop you being a first-time buyer for SDLT?

Introduction

People often search for this issue when buying their first home and a solicitor’s form asks whether they have ever “owned an interest” in property. The confusion usually arises where someone has been named in a trust connected to a family home, but has never actually owned or occupied that property.

The key SDLT question is not simply whether you have ever been mentioned in a trust document. The real question is whether you have previously acquired a “major interest” in a dwelling within the meaning of the Finance Act 2003. If your position is only a future or contingent right to receive sale proceeds, that is not usually the same as owning the property itself.

The Question

A buyer is purchasing their first home. They are named as a beneficiary under a declaration of trust relating to a parent’s home. The parents still own and occupy the property and have lifetime interests in it. The buyer cannot live there, and their entitlement is only to receive a share of the sale proceeds if the property is sold in future.

The buyer wants to know whether that trust interest means they are no longer a first-time buyer for SDLT purposes, especially where a solicitor’s declaration form is worded broadly and asks whether they have ever “owned an interest” in property.

Nick’s Explanation

Nick’s explanation was that first-time buyer relief depends on the statutory definition in the Finance Act 2003, not on broad wording in a form.

In anonymised form, his reasoning was:

“Being named as a beneficiary under a deed of trust does not give you a current major interest in the property. The parents retain the lifetime interest, and the beneficiary is only entitled to share in the proceeds of sale in the future. A future or contingent interest in sale proceeds is not the same as owning the freehold or leasehold estate in possession.”

He also explained that where a person does not currently own the property, has no present right to occupy it, and only has a future right to money if the property is sold, that does not amount to having previously acquired a major interest in a dwelling.

His conclusion was that, on those facts, the buyer should still be treated as a first-time buyer, provided the other conditions for relief are met.

The Law

First-time buyer relief for SDLT is provided by section 57B of the Finance Act 2003, which states:

“Schedule 6ZA (first-time buyers) makes provision for relief from stamp duty land tax in the case of acquisitions by first-time buyers.”

The main definition is in Schedule 6ZA, paragraph 1(2) Finance Act 2003:

“In this Schedule ‘first-time buyer’ means an individual who—
(a) has not previously been a purchaser in relation to a land transaction the main subject-matter of which was a major interest in a dwelling, and
(b) has not previously acquired an equivalent interest in a dwelling situated anywhere in the world.”

The phrase “major interest” is defined by section 117(2) Finance Act 2003:

“‘Major interest’ in relation to land means the fee simple absolute (freehold) or a term of years absolute (leasehold) in the land, other than a lease which is—
(a) for a term of 7 years or less, or
(b) reversionary on a term of more than 21 years.”

So the legislation focuses on whether the person has previously acquired a freehold, or a qualifying leasehold, in a dwelling. That is a narrower test than asking whether they have ever had any connection at all with property.

Analysis

Step by step, the position works like this.

First, a beneficiary under a trust does not automatically own a major interest in land. Trust arrangements can create very different rights, and the exact wording matters.

Second, if the parents or other occupiers retain lifetime interests, that usually means they keep the present right to occupy or enjoy the property during their lifetimes. The beneficiary does not have present possession.

Third, if the beneficiary’s entitlement is only to a share of the proceeds when the property is sold in future, that is a right to money arising on a future event. It is not the same as already holding the freehold or leasehold estate.

Fourth, a restriction such as an over-55 occupation clause may reinforce the practical point that the beneficiary cannot live there, but the main legal issue is still whether they acquired a major interest in the dwelling. The inability to occupy is not the test by itself; the key point is that the beneficiary has not acquired the freehold or leasehold estate in possession.

Fifth, solicitor declaration forms are often drafted in broad language. If a form asks whether the buyer has ever “owned an interest”, that wording should be read in light of the statutory SDLT test. For first-time buyer relief, the relevant issue is whether the buyer has previously acquired a major interest in a dwelling, or an equivalent interest abroad.

On the facts described here, the buyer has only a future or contingent right to sale proceeds under a trust, while the parents retain lifetime interests. That does not amount to a previous acquisition of a major interest in a dwelling.

Accordingly, that trust position should not, by itself, prevent the buyer from qualifying as a first-time buyer for SDLT.

Outcome

If your only connection to a family property is that you are named under a trust and may receive a share of the sale proceeds in future, while someone else retains the lifetime interest and present enjoyment of the property, that will not usually mean you have previously acquired a major interest in a dwelling.

On those facts, you can still be a first-time buyer for SDLT purposes, assuming:

• you have never previously owned a freehold or qualifying leasehold in a dwelling anywhere in the world;
• the property you are buying will be your only or main residence; and
• the purchase falls within the first-time buyer relief rules and price limits in force at the time.

Practical Steps

If you are in this situation, take these steps before signing your SDLT declaration:

• read the trust wording carefully and identify exactly what right you have;
• check whether you have any present legal or beneficial ownership of the property itself, or only a future right to money on sale;
• confirm whether another person has a life interest or other present right to occupy or enjoy the property;
• consider whether you have ever owned any other freehold or leasehold residential property in the UK or abroad;
• ask your conveyancer to apply the statutory test in Schedule 6ZA and section 117(2) Finance Act 2003, rather than relying only on broad form wording;
• keep a copy of the trust deed and any written explanation showing why no major interest has previously been acquired.

If the trust wording is unusual, or if you may have acquired some other form of beneficial ownership in the past, the detail should be reviewed carefully before the SDLT return is filed.

Conclusion

For SDLT first-time buyer relief, the important question is whether you have previously acquired a major interest in a dwelling. A future entitlement to sale proceeds under a trust, where others retain lifetime interests and present occupation, is not normally the same as owning the freehold or leasehold of the property. On that basis, such a trust interest should not usually stop you being treated as a first-time buyer.

Legal References Used

• Finance Act 2003, section 57B
• Finance Act 2003, Schedule 6ZA, paragraph 1(2)
• Finance Act 2003, section 117(2)

This page was last updated on 22 March 2026.

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