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HMRC internal manual

Stamp Duty Land Tax Manual

SDLT - higher rates for additional dwellings: interests treated as owned by an individual, trusts, children [including children subject to the Mental Health Acts]

Where an individual is a legal and beneficial owner of an interest they will own that interest for the purposes of Condition C, but there are a number of other situations in which an individual will be treated as owning an interest in another dwelling.

Bare Trusts

Where an individual has absolute beneficial ownership of an interest in land but legal ownership is held by another person (as in a bare trust or nominee arrangement) the individual with beneficial ownership is treated for the purposes of Condition C to own that interest [Para 3 Sch 16 FA 2003 and para 11(2) and (3) Sch 4ZA FA 2003].  This also applies where the beneficiary of the trust would be absolutely entitled but for being under age or disabled in a way that prevents them from being legally capable of owning property.

Trusts

Where a dwelling is owned by another person subject to a trust which gives the individual a right to occupy the dwelling for life or the right to the income earned in respect of the dwelling, the individual is treated as owning the interest [Para 11(1) and (3)]. This treatment will not apply to interests in dwellings which are trust property of a trust that gives the trustee a discretion to apply income between a class of beneficiaries or a trust which accumulates income.

Children

Where a minor child would be treated as owning an interest in land because they are a beneficiary of a trust, the parents of that child (and, if the parents are not married to one another, the spouses or civil partners, if any, of those parents) are treated for the purposes of Condition C as owners of the interest [Para 12].

Similar treatment applies to an interest in land outside of England, Wales or Northern Ireland owned directly by an individual under the age of 18 (where that is allowed).  In this case, the parents of that child (and, if they are not married to one another, the spouses or civil partners of those parents) are treated for the purposes of Condition C as owners of the interest [Para 17(4)].

Children subject to the Mental Capacity Act 2005 or the Mental Capacity Act [Northern Ireland] 2016

Before 22 November 2017, purchases on behalf of children normally take into account the child’s parents’ (and, if the parents are not married to one another, the spouses or civil partners, if any, of those parents) property holdings for the purpose of the Higher Rates of SDLT.

From the 22 November 2017, a child’s parents’ property is ignored when a trustee acting pursuant to an appointment made by the Court of Protection [in England and Wales], or acting pursuant to an appointment under the Mental Capacity Act (Northern Ireland) 2016, purchases property on behalf of such a child [Para 12(1A)].

 

 

 

`Para` references are to paragraphs in Schedule 4ZA of the Finance Act 2003.