Chapter SDLTM09560
Published date | 19 March 2016 |
Record Number | SDLTM09560 |
Where the acquisition of a chargeable interest is exclusively for the purpose of development or re-development and resale in the course of a property development trade, the 15 per cent higher rate charge will not apply to the transaction. Instead, SDLT will be charged at the higher rates for additional dwellings.
However, a further return and payment of additional SDLT will be required if the relevant rules in Withdrawal of relief (SDLTM09660) below apply.
A property development trade is defined as one that consists of or includes buying, and developing or redeveloping for resale, land and property.
This definition will cover a range of activities, from the refurbishment of substantially the whole of a property (including, for example fitting new bathrooms, kitchens, and so on) prior to resale through extensive works on the property including extensions, and so on, to the demolition of the property and replacement with one or more new residential units or a commercial property. It will also include the sale of land interests out of the land acquired, for example, smaller parcels of land or the granting of leases.
Examples- A company purchases a chargeable interest in a dwelling in the course of a bona fide property development business with the intention of redecorating and reselling the property. The interest costs £2.5 million. The higher rate charge does not apply and SDLT is payable at the higher rates for additional dwellings.
- A company purchases a chargeable interest in a dwelling with the intention of refurbishing and reselling the property. The interest costs £2.5 million. The company is unable to find a buyer following the renovation and makes the commercial decision to find a tenant for the short term prior to testing the market again in the future. The higher rate charge does not apply and SDLT is payable at the higher rates for additional dwellings. The facts at the effective date of the transaction are key to establishing whether or not the higher rate charge applies.
- A company purchases a chargeable interest in a dwelling with the intention of refurbishing and reselling the property. The interest costs...
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