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Where Taxpayers and Advisers Meet

SDLT First Time Buyer Relief

Lee Young
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Joined:Wed Aug 06, 2008 3:26 pm
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SDLT First Time Buyer Relief

Postby Lee Young » Fri Nov 18, 2022 10:06 am

I have a client whose father has died intestate and she is one of four beneficiairies of his estate. She is in the process of buying her first property. If she is not entitled to first time buyer relief the purchase price will give rise to a small SDLT liability. Although the inheritance of a quarter of a property does not, I believe, cause her to be liable for the higher SDLT rate, I believe it will deny her the ability to be a first time buyer?

1. is my last statement correct?
2. if so, when is she deemed to inherit the property for the purposes of FTBR?
3. could dad's estate be varied so that her share of the property is given away, and if so would that reinstate her entitlement to FTBR?

Any expert guidance will be gratefully received.

Thank you.
Lee Young
Solicitor, Chartered Tax Adviser and Trust and Estate Practitioner


Partner, Frettens LLP
lyoung@frettens.co.uk
01202 491701

someone
Posts:688
Joined:Mon Feb 13, 2017 10:09 am

Re: SDLT First Time Buyer Relief

Postby someone » Fri Nov 18, 2022 3:59 pm

It's relatively easy to find commentary that says that it denies her first time buyer status but I don't understand why the legislation says that (but it's not at all uncommon for me to not understand why legislation says something different to what I think it ought to mean)

https://www.legislation.gov.uk/ukpga/2003/14/schedule/6ZA

Part 3 Interpretation "First-time buyer"

Section 6 1
(a) - not previously a purchaser (I assume inheriting doesn't count as purchaser)
(b) - i the inherited property was not outside the UK (assumed)
ii the inherited property was not in Wales (assumed - although I don't understand why 117(2) talks about england but Part 3 6 1 (b) ii talks about wales...)
(c) Something to do with land sold to financial institutions (don't see why that applies)
(d) ditto (c)


This isn't going to be very helpful to you understanding this but hopefully someone else will now pop up to say why I'm wrong...

maths
Posts:8506
Joined:Wed Aug 06, 2008 3:25 pm

Re: SDLT First Time Buyer Relief

Postby maths » Sat Nov 19, 2022 5:40 pm

I'm no SDLT expert so cannot satisfy your request for "expert guidance". However for what it's worth my analysis is as follows:

FTBR is denied if the transaction is, inter alia, a higher rate transaction for Sch 4ZA para 1 purposes [Sch 6ZA para 1(7)].

A high rate transaction requires, inter alia, under Condition C [Sch 4ZA para 3(4)} that at the end of the day which is the purchase transaction the purchaser has a major interest in a dwelling other than the purchased dwelling. So the question seems to be whether when "completion" [FA 2003 s119] of the purchased property occurs the buyer has already "inherited" another property (ie has a major interest; Sch 4ZA para 3(4)).

It would, however, prima facie seem that Sch 4ZA para 16 saves the day. It provides that no major interest is deemed to arise for the 3 year period beginning with the date of the inheritance. Thus, so long as the purchase of the property occurs within 3 years of the date of the inherited property no major interest in the inherited property is assumed to exist. Unfortunately this applies only wrt to Sch 4ZA para 3(4)(a) purposes and not Sch 6ZA para 6(1)(a) purposes.

Thus, if by the date of completion of the purchased property the individual has inherited another property FTBR does not apply. If, however, the inheritance has nor occurred by date of purchase FTBR applies.

For succession purposes a beneficiary has no beneficial interest in the deceased's estate until either the estate has been administered or an earlier transfer of an interest is transferred or appropriated to the beneficiary. Thus, if the estate remains unadministered at the date of completion of the purchased property the purchaser will not have previously been a purchaser of a major interest.In which case FTRB applies.

maths
Posts:8506
Joined:Wed Aug 06, 2008 3:25 pm

Re: SDLT First Time Buyer Relief

Postby maths » Sat Nov 19, 2022 5:47 pm

Re the DoV point raised by Lee I'm not sure it would work with a view to becoming a FTB.

A DoV in the "real" world amounts to a gift by the person inheriting. Thus to make the gift would presuppose that the gift of the property had been implemented in the first place. Thus, the beneficiary inheriting would have acquired a beneficial interest in a property other than the one being purchased.

The deeming under IHTA 1984 s142 would have no relevance or impact for SDLT purposes only IHT.

Lee Young
Posts:2707
Joined:Wed Aug 06, 2008 3:26 pm
Contact:

Re: SDLT First Time Buyer Relief

Postby Lee Young » Wed Nov 23, 2022 3:52 pm

Thanks Maths. I was pretty certain ther DOV would not ework, but thoughth worth asking.

Your analysis of the SDLT issue is as ever erudite and is greatly appreciated. I think I have an answer!

Lee
Lee Young
Solicitor, Chartered Tax Adviser and Trust and Estate Practitioner


Partner, Frettens LLP
lyoung@frettens.co.uk
01202 491701


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