First time buyer status query with mixture of inheritance from trusts and estates with property

curious_kitty

Hello MSE forums

I am trying to work out if in the eyes of the taxman if I am a first time buyer (FTB) or not, i.e. for stamp duty tax relief (SDTR) and a Lifetime ISA (LISA). I am looking to buy my first home, but I have inherited cash and stocks/shares from a couple of estates that had included properties. As far as I know I never legally 'owned' any properties, but it all becomes a bit confusing when the wills refer to residual estates and FTB status refers to 'interests' in properties. 

My situation is:

1. My Great Aunt passed away when I was a baby and named myself as the main beneficiary of her residual estate. Her assets, including a property, were converted to cash and invested in stocks/shares. This was held in trust for myself, with her husband, my Father and his Cousin, benefiting from the income from the stocks/shares until they died. I am not sure, but I assume the title deed for the property was held by the trust and then sold to create a portfolio of stocks/shares. I guess this would be checked against the Land Registry by a solicitor when I bought a property in regards FTB SDTR and also withdrawing for a house purchase from a LISA? 

2. My Granny passed away a few years ago. I inherited a small percentage of her residual estate, which included some cash and a flat. When settling her estate, I was paid cash from my Granny's accounts and the flat remains in my Mother's possession. I believe the title deeds went straight to my Mother and have never been in my name. 

3. A few years ago, my Father passed away and no property was included in his estate. My Great Aunt's husband and the Cousin had also passed by this point and therefore the trust passed over the stocks/shares finally to myself. Now I wish to use this to fund the deposit for my first property. 

Before the changes in November 2022 HMRC had a FTB definition for SDTR in a publication online: 

"In order to count as a first time buyer, a purchaser must not, either alone or with others, have previously acquired a major interest in a dwelling or an equivalent interest in land situated anywhere in the world. This includes previous acquisitions by inheritance or gift, or by a financial institution on behalf of a person under an alternative finance scheme."  

Since the changes in November 2022 the publication above has been withdrawn and I've been finding it hard to find a link to a clear definition on HMRC's website - lots of information on the STDR/LISA, but says 'if you're a first time buyer' and not much more on that specifically (or am I missing something?)

My concerns are that the inheritance from either my Great Aunt and/or my Granny count as 'a major interest' in a property, which means I am no longer a FTB. Or perhaps because I have received shares of residual estates in the form pf cash and stocks/shares and not had any title deeds in my name, then actually I haven't had a 'major interest' and I am actually a FTB?!? 

The more I think about it, the more my brain melts... So any advice is greatly appreciated! Thanks in advance

jonnydeppiwish!

As far as I’m aware, if you’ve never been named on the deeds, and the properties were sold on death, then you should still be a FTB but I’m not that experienced in this!

user1977

You have inherited money, not property. You are a FTB. 

SDLT_Geek

curious_kitty said:

Hello MSE forums

I am trying to work out if in the eyes of the taxman if I am a first time buyer (FTB) or not, i.e. for stamp duty tax relief (SDTR) and a Lifetime ISA (LISA). I am looking to buy my first home, but I have inherited cash and stocks/shares from a couple of estates that had included properties. As far as I know I never legally 'owned' any properties, but it all becomes a bit confusing when the wills refer to residual estates and FTB status refers to 'interests' in properties. 

My situation is:

1. My Great Aunt passed away when I was a baby and named myself as the main beneficiary of her residual estate. Her assets, including a property, were converted to cash and invested in stocks/shares. This was held in trust for myself, with her husband, my Father and his Cousin, benefiting from the income from the stocks/shares until they died. I am not sure, but I assume the title deed for the property was held by the trust and then sold to create a portfolio of stocks/shares. I guess this would be checked against the Land Registry by a solicitor when I bought a property in regards FTB SDTR and also withdrawing for a house purchase from a LISA? 

2. My Granny passed away a few years ago. I inherited a small percentage of her residual estate, which included some cash and a flat. When settling her estate, I was paid cash from my Granny's accounts and the flat remains in my Mother's possession. I believe the title deeds went straight to my Mother and have never been in my name. 

3. A few years ago, my Father passed away and no property was included in his estate. My Great Aunt's husband and the Cousin had also passed by this point and therefore the trust passed over the stocks/shares finally to myself. Now I wish to use this to fund the deposit for my first property. 

Before the changes in November 2022 HMRC had a FTB definition for SDTR in a publication online: 

"In order to count as a first time buyer, a purchaser must not, either alone or with others, have previously acquired a major interest in a dwelling or an equivalent interest in land situated anywhere in the world. This includes previous acquisitions by inheritance or gift, or by a financial institution on behalf of a person under an alternative finance scheme."  

Since the changes in November 2022 the publication above has been withdrawn and I've been finding it hard to find a link to a clear definition on HMRC's website - lots of information on the STDR/LISA, but says 'if you're a first time buyer' and not much more on that specifically (or am I missing something?)

My concerns are that the inheritance from either my Great Aunt and/or my Granny count as 'a major interest' in a property, which means I am no longer a FTB. Or perhaps because I have received shares of residual estates in the form pf cash and stocks/shares and not had any title deeds in my name, then actually I haven't had a 'major interest' and I am actually a FTB?!? 

The more I think about it, the more my brain melts... So any advice is greatly appreciated! Thanks in advance

I can help a little on the stamp duty land tax aspects here.  The guidance you found  https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1116811/Withdrawn_Stamp_Duty_Land_Tax_relief_for_first_time_buyers_-_guidance_note.pdf has only been withdrawn because it needs to be updated for the new thresholds and was anyway due to be moved onto the HMRC SDLT Manual.  Given that the issue you are looking at has not been affected by 2022 changes, it is still sensible to look at that guidance, especially chapter 8 questions 12 and 13.

To get a better idea of when HMRC consider a person to have acquired a major interest by inheritance, you could look at the guidance here https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09795 (although in a slightly different context, relating to the 3% surcharge for additional dwellings, so you should ignore the references to a share of not more than 50% and a three year test).

To really get your teeth into it, have a look at https://www.blakemorgan.co.uk/wp-content/uploads/Downloads/Stamp-Duty-Land-Tax-First-Time-Buyers-Relief-29052019.pdf especially pages 7 - 8 and example 3.3.4.  Here is part of the text from that:

"That brings us to a trap. People sometimes own a property for a short time as a result of inheritance. On the death of a person, their property is held by their personal representatives who have to administer their estate. At that point the beneficiaries have no “major interest” in the property, just a right to compel the administration of the estate. Nor are the personal representatives treated (for an acquisition in their personal capacity) as having a major interest in the estate property37. Often the property is sold during the administration. Sometimes the property is first “appropriated” to some or all of the beneficiaries; that causes a problem, see example 3.3.4 below.

Thus if a person who would otherwise be a first time buyer has benefitted from an estate involving a property, it is important to establish whether the property was ever assented or appropriated to them. If this was the case, they do not count as a first time buyer, however large or small the value of what they received."