SDLT property: fixtures and chattels
HMRC has issued new guidance this week confirming its position on chattels claims in relation to Stamp Duty Land Tax (SDLT) liability.
Buyers often want to reduce their SDLT liability on a property purchase by arguing that some of the purchase price relates to chattels, i.e. tangible, moveable assets that are not permanently attached to the property such as furniture, paintings, rugs and curtains.
However, HMRC is alive to this increasing trend, updating its guidance to confirm that any allocation to chattels will have to be properly documented in the sale contract.
This will not be a simple exercise as sellers will need to consider the Capital Gains Tax (CGT) implications of selling valuable chattels as the gain on those assets will not be protected by principal private residence (PPR). As a result, conveyancers will want to carve out of their engagement advice relating to CGT.
Subcribe to news and viewsIn the majority of cases consideration for the transaction will be correctly attributed to the land transaction, with no apportionment for chattels being appropriate. However, where a purchaser agrees to buy a property for a price that includes an amount properly attributed to chattels, that amount will not be subject to SDLT, as long as the purchaser can provide contemporaneous evidence from the conveyancing process that the attribution is genuine and arises from a separate negotiation for those chattels, for example by being expressly identified and priced in the sale contract. Simply showing that there were some chattels in the property when it was sold would not be considered sufficient evidence.
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm04010
