Stamp Duty (...and Higher Rate SDLT) Liability on £150K Building Plot?

Adminjsm

Hi. I wonder if anyone can advise please? I'm very confused!

I own my own home, a second rental property, and am in the process of negotiating to buy a plot of land for £150K (below £250K threshold), on which I will build a new house. The land purchase will complete well before any building work is started.  Do I:

- Have full 3% Stamp Duty liability on the full value of the land immediately (i.e. £4.5K)?
- NOT have SDLT liability as it's not classed as a "dwelling" when I purchase per HMRC guidance?
- Not have SDLT liability initially, but DO have once foundations are finished, per HMRC advice below:

"Relevant properties that are in the process of being constructed will be treated as dwellings at the point where building works on top of the foundations have begun"

Thanks!

user1977

Whether it's a dwelling or not is determined at completion - so if it's a vacant plot, it's a non-residential property for SDLT purposes. The bit you've quoted would be relevant if you were buying it after construction had already started.

Adminjsm

Thanks user1977. I think this other quote I found below articulates what you've said...that there would be no SDLT payable up front. The reason I put the first quote was that I wasn't clear whether I would become liable for SDLT on the land at the point where I started building onto the foundations. It sounds from your reply that HMRC will only judge whether it's a dwelling and therefore subject to SDLT after completion, and since I won't be buying it at that point, there's no instance of judgement and I won't be liable at all? ....That SDLT would only come into play (for the prospective purchasers) if I chose to sell after completion (....which I don't intend to do by the way!). Or am I misunderstanding?

"If Pat buys a plot on which construction has not yet started, she’s not buying a dwelling. She’s buying a building plot. So the surcharge (HRAD) rates don’t apply, regardless of how many other houses (including second homes) that she owns and regardless of whether or not she intends to use the eventual house as her only or main residence."

user1977

SDLT is charged on completion of a purchase, based on what the physical situation is at that point. Your SDLT liability doesn't change during your ownership.

SDLT_Geek

Adminjsm said:

Hi. I wonder if anyone can advise please? I'm very confused!

I own my own home, a second rental property, and am in the process of negotiating to buy a plot of land for £150K (below £250K threshold), on which I will build a new house. The land purchase will complete well before any building work is started.  Do I:

- Have full 3% Stamp Duty liability on the full value of the land immediately (i.e. £4.5K)?
- NOT have SDLT liability as it's not classed as a "dwelling" when I purchase per HMRC guidance?
- Not have SDLT liability initially, but DO have once foundations are finished, per HMRC advice below:

"Relevant properties that are in the process of being constructed will be treated as dwellings at the point where building works on top of the foundations have begun"

Thanks!

I agree with @user1977.  The SDLT liability is assessed as at the completion of the purchase.

The only nuance I can think of would apply if you are buying the garden of a property from the property owner.  Then the plot could count as "residential".  However, it would still not be a "dwelling", so the 3% extra would not apply.  The nil rate band would then be £250K (rather than £150K for non-residential property).

Adminjsm

Thank you very much user1977 & SDLT_Geek that helps a lot