Higher rates of SDLT apply to residential properties, compared to non-residential properties. For this purpose, a residential property includes “a building that is used or suitable for use as a dwelling, or is in the process of being constructed or adapted for such use” (s116, Finance Act 2003).  

On 27 June 2025, the Court of Appeal handed down its judgement in the case of Amarjeet and Tajinder Mudan v HMRC [2025] EWCA Civ 799. In a press release published on 31 July 2025, HMRC says the decision is a “major win” for HMRC and confirms HMRC’s “long-standing view that if a property requires repairs but retains the fundamental characteristics of a dwelling, it is still suitable for use as a dwelling and attracts residential rates of SDLT”. 

As a result of the decision, HMRC is warning people who have bought a property in need of repair to be “vigilant” of tax agents offering to secure SDLT repayments on their behalf. HMRC says that “making claims of this kind often leave the homeowner liable for the full amount of SDLT, plus penalties and interest”.  

HMRC says that “it is taking decisive action on spurious SDLT repayment claims, using civil and criminal powers to deal with the minority who undermine the tax system”. ICAEW members advising on SDLT repayment claims should ensure that they comply with professional conduct in relation to taxation.  

HMRC’s press release includes a summary of the facts in the Mudan case and highlights some of the key principles from the earlier decision of the Upper Tribunal. The decision of the First-tier Tribunal may also be of interest as it sets out the condition of the property. ICAEW explored this issue in more detail in an article published in January 2025.