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Where Taxpayers and Advisers Meet

Purchases by companies - condition B

Joined:Mon Sep 13, 2021 7:56 pm
Purchases by companies - condition B

Postby Mike77 » Mon Sep 13, 2021 8:42 pm

Hi all, I'm purchasing a residential property through a limited company. HMRC state the following in respect of purchases by companies:

"A purchase of major interests in one or more dwellings by a company will comprise a higher rates transaction and the higher rates of SDLT will apply if Conditions A and B are met in respect of at least one of the dwellings [Paras 4 and 7]:

Condition A - the dwelling, or a major interest in it, is purchased for chargeable consideration of £40,000 or more.
Condition B - the chargeable interest acquired is not subject to a lease which has more than 21 years to run on the date of purchase.

If none of the interests in dwellings meet both Conditions A and B then the higher rates will not apply to the purchase."

I understand Condition A, but don't understand what Condition B means. I've searched the internet for hours as well as phoning HMRC but without success.

The property I'm purchasing is over £40k but is a leasehold property with over 21 years left on the lease, hence why I'm interested. I'm 99% sure that SDLT will be payable at the higher rate but just want to understand what condition B means in layman's terms.

Thanks very much in advance!

Joined:Fri May 16, 2014 3:47 pm

Re: Purchases by companies - condition B

Postby AGoodman » Wed Sep 15, 2021 12:57 pm

Condition B allows you to avoid the higher rate if you are buying a freehold reversion which is subject to a lease - ie you buy the freehold but that does not entitle you to possession of the property for at least 21 years (and possibly 100 or 900 years).

It doesn't protect the buyer of the lease itself (i.e. you), only somebody buying a title subject to a lease. In your case you will meet condition B and the higher rate is payable.

Joined:Mon Sep 13, 2021 7:56 pm

Re: Purchases by companies - condition B

Postby Mike77 » Sun Sep 19, 2021 11:24 pm

Hi AGoodman. Thank you very much for clearing this up for me.

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