SDLTM00460 - Scope: what is chargeable: land transactions: garden or grounds – use

(This page was introduced on 25 June 2019)

Considering whether land is garden or grounds - Use

Although all factors must be taken into account and weighed against each other, the use of the land is potentially the most significant indicator of whether the land is ‘garden or grounds’. The aim of the legislation is to distinguish between residential and non-residential status, so it is logical that where land is in use for a commercial rather than purely domestic purpose, the commercial use would be a strong indicator that the land is not the ‘garden or grounds’ of the relevant building. It would be expected that the land had been actively and substantively exploited on a regular basis for this to be the case.

A large number of activities taking place on land may have a domestic or commercial character depending on the individual facts, so it is likely that HM Revenue and Customs (HMRC) would expect to see evidence of commercial use.

For example beekeeping, grazing and equestrian activities are all activities which could be purely for leisure or could be performed on a commercial basis.

Parkland which, whilst grazed by livestock, primarily provides an appealing setting for a dwelling and on which the livestock are not kept on a commercial basis is likely to remain the ‘garden or grounds’ of the relevant building. In contrast the same land grazed by livestock under a genuine commercial arrangement would be far less likely to be the ‘garden or grounds’ of the building.

The grazed land might also have a value as part of a ‘treasured view’ from the dwelling. In this case the relative uses of the land would have to be weighed up in deciding whether it formed part of the ‘garden or grounds’ of the dwelling.

Where a lease has been granted to a third party for exclusive occupation of the land, this may be an indicator of non-residential use. However occasionally allowing third parties to occupy or exploit the land is unlikely to mean that the land ceases to be ‘garden or grounds’. Where a lease or licence is in place, the true nature (including commencement and duration) of the agreement will need to be established.

Certain types of land can be expected to be ‘garden or grounds’ or be expected to be commercial land unless otherwise established. So paddocks and orchards will usually be residential, unless actively and substantively exploited on a regular basis. However, where a field usually exploited for an arable agricultural purpose is sitting fallow this is not an indicator that it has become ‘garden or grounds’. Fallow periods are an integral part of commercial management of farmland. Such land may have been exploited using agricultural machinery over a period of time, and so is unlikely to have the nature of ‘gardens or grounds’.