Welcome to the third stamp taxes update from Sean Randall Tax, Stamp Duty Matters. I hope to publish these quarterly or bi-annually. I hope you find them useful. Please do give me any feedback on the content.
Sean Randall Tax
This newsletter contains relevant updates since April 2025.
Abolishing stamp duty land tax
The Guardian published a front-page article in August 2025 that the government is considering abolishing stamp duty land tax for owner occupiers. It would be replaced with an annual tax of 0.54 per cent on property values over £500,000 and for properties worth over £1 million, the tax would almost double to 0.81 per cent on the portion of the value over £1 million. Regardless of the economic and policy merits of the proposal, the following things are worth pointing out:
(i) this is not the first time that proposals have been made to reform the tax;
(ii) this may be “kite-flying” – leaking stories to gauge the popularity of a policy;
(iii) the scale of the change, its impact on the market and the potential for unintended consequences would be material. This means that the change would probably not be implemented before the end of the decade;
(iv) it is unclear whether the devolved governments would follow suit – if they do not, land and buildings transaction tax and land transaction tax would continue, with consequential impact on the block grants;
(v) the uncertainty may drive buyers to delay purchases in the run up to the autumn Budget and beyond;
(vi) distortion may return with sales bunching below the proposed £500,000 and £1m thresholds limits, as used to happen under the old “slab system”; and
(vii) the public may baulk at paying an annual tax based on the value of the property when the percentage of the property they own (unencumbered by debt) is low.
Case law
In the last newsletter, I mentioned that I was conducting a mixed-use SDLT appeal at the First-tier Tribunal. It involved a paddock used exclusively by the operator of a livery business for 30 years. The appeal was dismissed. We are waiting for a full decision but based on the summary it seems that the tribunal found that the use of a paddock for grazing horses is “the paradigm use of a paddock” and (in my view wrongly) failed to distinguish between a house-owner using a paddock to graze horses for private purposes and an operator of a livery business using a paddock under a commercial arrangement with the house-owner to graze horses under its care in connection with its trade.
More mixed-use appeals are expected this year.
Derelict dwelling reclaims
At the start of the summer, the Court of Appeal handed down its decision in Mudan. The appeal was an unsuccessful attempt to argue that a building that had been used as a dwelling before being vandalised by tenants in the run up to completion and was not habitable at completion was not “residential property”.
The tribunal considered that no reasonable person would have been prepared to occupy the property in the state it was in at completion. However, this did not mean that the property was not “suitable for use” as a dwelling. The tribunal held that although suitability must be tested at completion, it does not mean suitable for immediate occupation. The thing(s) preventing the building from being suitable for occupation at completion must require more than repair/renovation. The appellants appealed the decision to the Upper Tribunal. The Upper Tribunal dismissed the appeal. It held that the statutory test focuses on the fundamental characteristics and nature of a building over a period of time, rather than a snapshot of habitability, at the effective date of the transaction. The appellants appealed the decision to the Court of Appeal. The Court of Appeal dismissed the appeal. It held that the focus of the test should be on the structure and character of the building. If the building has a past history of a dwelling, the question is whether it has retained its identity as a dwelling at completion.
This should stop reclaim farms selling SDLT reclaims on derelict dwellings and HMRC are likely to apply to strike out related appeals. But the impact of the decision on various types of properties is uncertain: eg, buildings that are sold partly developed (perhaps at “shell and core” stage) and buildings that were historically designed, built and used as dwellings, and remain suitable for use as dwellings but have been used exclusively and continuously for non-residential purposes over many years. Reasonable views differ on when a building ceases to be “in the process” of being constructed or adapted for use as a dwelling and when a building loses its identity as a dwelling.
Shared ownership
HMRC are expected to release new guidance on SDLT and shared ownership transactions. This guidance is long awaited. The rules in this area are relatively complex and frequently misunderstood. The guidance is expected to confirm unequivocally that SDLT relief is available in full where an owner of a shared ownership property staircases to 100 per cent as part of their sale of the property. For many years (and possibly still) residential property lawyers have advised clients to pay SDLT in these circumstances. Once former shared ownership owners learn that they have paid SDLT in error, there may be a wave of professional negligence claims being brought against advisers.
Sean Randall
August 2025