SDLTM00450 - Scope: what is chargeable: land transactions: garden or grounds - historic and future use

Considering whether land is garden or grounds - Historic and Future use

Historic use can be relevant

The status of the land in question must be assessed at the time of the land transaction (see SDLTM00360 for the meaning of this phrase) but that does not mean that only the use on that day will be considered. The aim of the legislation is to capture the real or true relationship of the land to the building at the time of the land transaction. So provided the building still falls within section 116 (1) (a) FA2003 at the time of the land transaction, the history of use of the land is relevant in considering the nature/status of the land at the time of the land transaction.

We should seek to establish the traditional or habitual use of the land to establish its true relationship to the building. This can be difficult but you will be looking for customary, continued or regular use. Use that is ephemeral or appears to be part of an artificial/contrived arrangement will not be indicative of the true relationship of the land to the building.

Where a purchaser is seeking to rely on the historic established use of land that is not in such use at the time of the land transaction, HM Revenue and Customs (HMRC) will expect the purchaser to retain and be able to provide evidence to support that use upon any request in connection with the relevant Stamp Duty Land Tax (SDLT) return. No evidence needs to be sent to HMRC when the SDLT return is submitted.

Future use is not relevant but the status of land can alter over time

Although the historic use of the land will be relevant, future use is not. So the purchaser’s intentions are irrelevant. This means that the same piece of land may constitute ‘garden or grounds’ in one purchase but not in another at a different time.

For instance, a purchaser (Person A) may acquire the garden of a dwelling (whether or not fenced/walled off at that time from the rest of the vendor’s property) separately from the dwelling, with the intention to use it for commercial purposes.

If at the time of the purchase the garden was enjoyed as a garden by the residents of the dwelling (i.e. the vendor) then the purchase will be of residential property regardless of the fact that the land is being purchased and the dwelling is not. However, if the same land is subsequently sold on by Person A then it may be the case that by the time of the subsequent sale it is no longer used as the garden of a dwelling and has therefore become non-residential land.