Property tax
Win for taxpayer on mixed use relief on large estate
The taxpayer and her late husband bought a substantial property with one main dwelling, two smaller dwellings, equestrian facilities and 150 acres of land. Part of the land was arable, some for a deer farm, some for a stud farm, and some other grazing, as well as gardens. The taxpayers purchased the deer under a separate contract two days before purchasing the property, which was under nine separate titles. HMRC opened an enquiry into the stamp duty land tax (SDLT) return, challenging the taxpayers’ view that this was a mixed-use property.
HMRC argued that the property was wholly residential. The land surrounded the main dwelling, and was as expected for a large country estate, with facilities for an active lifestyle. The land contributed to the rural character of the property, and the views. There was no quantitative limit on the amount of land that could count as residential. The fact that an occupier could do without the land did not mean that it was not residential property. The marketing materials indicated that the grounds came with the residential property. The agreements for grazing and farming did not seem to have been in place at the time of completion, as it was sold with vacant possession.
The taxpayer gave evidence as to the use of the property. It was submitted that the property was advertised as mixed-use. The vendor conducted business activities such as horse breeding and deer farming from the premises, and leased land for grazing. There was also a commercial agreement with an energy provider about cables running through the land. The land had always been farmed, though the taxpayer formalised the grazing agreements.
The First-tier Tribunal (FTT) found for the taxpayer. The land had been used as a working farm for many years and met the requirements of the Rural Payments Agency. The main house and gardens, with some amenities, were agreed to be residential property. However, the 150 acres did not fall within the category of ‘garden or grounds’ use. The taxpayer gave clear, credible evidence about the use of land, and provided documentary evidence. Significant parcels of the land were used for non-residential purposes such as grazing, growing maize and breeding horses and these were commercial activities of long standing.
From Tax Update January 2026, published by S&W Partners LLP
Win for taxpayer on multiple dwellings relief
The First-tier Tribunal (FTT) has found on the facts that a house with an annex qualified as two separate dwellings. Multiple dwellings relief (MDR) therefore applied.
The taxpayers purchased a house with an annex. He sought to class this as two separate dwellings, so that the stamp duty land tax (SDLT) on purchase would be reduced by MDR. Both house and annex had their own doors to the outside, water supplied, heating and fuse boards. There were two internal connecting doors. The annex had both cooking and washing facilities.
HMRC argued that the annex was not a separate dwelling, as although it had been used as such previously when let by the previous owner to students, it was not in a condition to be a separate dwelling. The only washing facilities (shower) were in the kitchen, with a separate room for the lavatory. The house and annex had one title and one council tax registration.
The FTT found for the taxpayer. It could consider the past history of the dwelling. The position of the shower would be suitable if there was one occupier, and a dwelling was not just a dwelling if suitable for multiple occupiers to have privacy from one another. Considering all the factors, the annex had a sufficient degree of privacy, self-sufficiency, and security to be a dwelling on its own, so with the history this was enough to allow the taxpayer’s appeal.
From Tax Update January 2026, published by S&W Partners LLP
Court of Appeal dismisses taxpayer’s SDLT appeal
The Court of Appeal (CA) has handed down its judgment in the stamp duty land tax (SDLT) case of The Tower One St George Wharf Limited. The case relates to a series of transactions for the transfer of an interest in a residential property from one group company to another. Whilst the CA accepted the taxpayer’s primary appeal ground, it also agreed with arguments set out in HMRC’s respondent’s notice on the application of the anti-avoidance provision in s75A, Finance Act (FA) 2003, leading to the ultimate outcome that the taxpayer’s appeal was dismissed.
The taxpayer’s primary appeal ground focused on the deemed market value rule for transactions with a connected company (s53, FA 2003). The CA agreed with the taxpayer’s contention that the ‘Case 3’ exemption from the market value rule set out in s54(4)(b), FA 2003 applied such that the SDLT should instead be calculated based on the (lower) actual consideration paid. However, the CA also agreed with HMRC’s alternative argument that the anti-avoidance provision in s75A, FA 2003 applied. Where the conditions are met, s75A requires consideration of how SDLT would have arisen on one single ‘notional land transaction’ instead of the actual series of transactions.
The CA agreed that the corporation tax avoidance purpose that precluded SDLT group relief for the actual transactions also precluded SDLT group relief to be taken into account for the notional transaction. It also found that the ‘Case 3’ exception from the market value rule would not have been available for the notional transaction. As a result, the SDLT charge arising was based on the (higher) market value of the lease and not the actual consideration paid.
From the Business Tax Briefing dated 9 January 2026, published by Deloitte
Practical Points
Every month, the Tax Faculty publishes short, practical pieces of guidance to help agents and practitioners in their day-to-day work.
