LBTT Scottish Stamp Duty - what is definition of "Commercial"?

pinklady21

Hello
Can any one offer an opinion on whether this property could be treated as commercial for LBTT (Stamp Duty, Scotland) purposes?

Former farm.
Comprises farmhouse, attached barn plus various other independent farm buildings - total area of barns and buildings is a bigger area than the house.
Around 10 acres of grazing land. Currently being grazed with sheep on a grazing contract.
Property contains a potential building plot where a former cottage was demolished, but no planning has been applied for.

Is is commercial? or residential? I am not clear what the criteria would be to decide one way or another - can anyone help?
Thank you!

Pixie5740

Sounds like mixed use property to me. LBTT4012.

A transaction where there is a mixture of residential and commercial interests (for example, a landed estate or a shop with a flat above it) is treated as a non-residential transaction and will therefore be subject to the non-residential LBTT rates and bands (see LBTT4011).

Although it does go on to say all land transactions will be treated on their own merits.

pinklady21

Indeed - I think you are correct that it is "mixed" and therefore is treated as non-residential. The related matter is that if the farmhouse is a replacement for a main residence, that has not been sold yet, I assume that even though the whole thing is "non residential", that the bit of the price that relates to the farmhouse would attract the additional 3%?

Agree that it could come down to a case by case basis though.
Does anyone have experience of buying a farm or smallholding in Scotland under the LBTT rules? How was it treated for tax purposes?

googler

Maybe it's just me, but how can anyone properly budget for the LBTT that they will have to pay if "each case will be decided on its own merits"?

davidmcn

googler wrote: »

Maybe it's just me, but how can anyone properly budget for the LBTT that they will have to pay if "each case will be decided on its own merits"?

Presumably you budget for the worst case scenario and keep the spare cash handy for 3 (?) years in case your return is reviewed.

pinklady21

It is a good point - the difference could be substantial - in our case possibly around £5 - 10k or so, so not too much in the grand scheme of things. But every penny comes in handy when buying a new house!

I imagine we will have to ask a surveyor to apportion values to each of the bits for tax purposes - the land, the farm buildings and the house. I assume that if any of the portions is under £40k, then it will be exempt anyway under "residential" and if under £150k will be subject to a zero rate if "non-residential."

Again, I am not 100% sure, as the online guidance is not the easiest to navigate. I suspect my solicitor will be able to find out from the appropriate authority if there is a query.

Has anyone bought a farm or smallholding under the LBTT rules, and could say how theirs was treated?