SDLTM09520 - Scope: when is Stamp Duty Land Tax (SDLT) chargeable: higher rate charge for acquisitions of residential property by certain non-natural persons FA03/S55/SCH4A: what is a dwelling? FA03/SCH4A/PARA7

A dwelling is defined for the purposes of the Schedule 4A higher rate charge as a building, or part of a building, that is used or suitable for use as a single dwelling, or is in the process of being constructed or adapted for such use.

For HMRC’s interpretation on “in the process of being constructed or adapted” please see SDLTM00400.

Where a building includes a number of dwellings (for example, a block of flats), all the dwellings in the building will be treated as being in the process of being constructed when this test is met, not when construction of the individual dwelling is commenced. This principle applies even if the ground floor is intended for non-residential use (for example, where the building consists of a shop with flats above).

Land that is, or is to be, occupied or enjoyed with the dwelling, such as a garden or grounds (including any building or structure on such land), is taken to be part of the dwelling. This will usually be a question of fact depending on the individual circumstances of each case.

Land that subsists, or is to subsist, for the benefit of the dwelling is taken to be part of the dwelling. This applies to an interest in land which is not contiguous with the dwelling and its garden or grounds: for example, a separate garage in a block.

The words “or is to” in the sentences above are interpreted by HMRC in the same way as they are for Schedule 4ZA “HRAD” (See SDLTM09750). They related to the situation where a dwellings is in the process of being built, so land is to be occupied or is to subsist for the benefit of that dwelling once it has been built.

‘Off-plan’ purchases

The subject-matter of a transaction is taken to include an interest in a dwelling where

  • the effective date is the date of substantial performance of the contract by virtue of FA03/SS44-45A or SCH17A/PARA12A/PARA19,
  • the main subject-matter of the transaction consists of or includes an interest in a building, or a part of a building, that is to be constructed or adapted under the contract for use as a single dwelling and
  • construction or adaptation of the building, or part of the building, has not begun by the time the contract is substantially performed.

This will include an ‘off-plan’ purchase where the purchase price is paid before construction has commenced.