Stamp Duty on Residential Property

All you Need to Know About Stamp Duty on Residential Property

It’s important to note that Stamp Duty on Residential Property puts a limit on the number of gardens that have been excluded from the main residence. People who have big gardens or land may want to pay attention to details.


Know What’s Allowed?

The stamp duty on residential property legislation allows grounds up to the ‘permitted area’ to fall within the main residence exemption. This is set at 0.5 of a hectare (1.24 acres). However, a larger area may be allowed where ‘having regard to the size and character of the dwelling’ is required for the reasonable enjoyment of the property.


Let’s Understand this by Examples

Let’s take the example of Tom. Tom has a property with a garden of around 0.94 hectares. Tom was a bit careless about telling about the additional area to HMRC. As a result, an investigation happened. As a result of this investigation, HMRC found out that the grounds exceeded the permitted area of 0.5 hectares allowed by the legislation. 

As the proceedings of the case went on, Tom argued that the additional property was needed to graze his horse. To which, the court said that there was no need to graze horses at a certain property. 

It won’t be wrong to say that the court doesn’t rule out against a taxpayer. There have been several examples where the court ruled in favour. These were the cases in which the arguments were extremely reasonable. In one of the cases, the court ruled in favour because the property was part of a rural area and therefore considered for enjoyment of the property. 

If you’re looking forward to selling a property, it’s important to note that these properties must have some substantial ground. You might want to avoid an investigation by HMRC. Since you would be paying stamp duty on residential property, and HMRC must consider it as mix property.

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