Non-residential SDLT rates and comparison with residential additional dwelling rates
Finance Act 2003 s.116 defines a 'mixed' transaction as one involving both residential and non-residential property. When a transaction is mixed, non-residential SDLT rates apply to the ENTIRE consideration: 0% on the first £150,000; 2% on £150,001-£250,000; 5% on amounts above £250,000 — with NO additional dwelling surcharge. Residential additional dwelling rates (from 31 October 2024: 5% on 0-£250k; 10% on £250k-£925k; 15% on £925k-£1.5m; 17% above £1.5m) are substantially higher.
What qualifies as mixed-use: genuine non-residential elements
- Agricultural land: genuinely farmed or grazed — evidenced by agricultural tenancy, grazing licence, or subsidy records
- Commercial outbuilding or barn: current or recent history of commercial use (storage; workshop; B2 or B8 planning use class)
- Commercial unit: self-contained commercial unit (shop; office within a converted building)
- Paddock used for livestock or commercial equestrian enterprise — NOT ornamental or personal use
- Ornamental paddock, domestic garden, and amenity grass do NOT qualify — HMRC treats these as residential
Fiander and Bower v HMRC [2021] UKUT 0156 and HMRC post-Fiander scrutiny
Fiander and Bower: Upper Tribunal held that paddocks used for horse-keeping were non-residential (not garden or grounds of the dwelling). HMRC's post-Fiander guidance distinguishes genuine equestrian commercial use from personal horse-keeping. HMRC has issued targeted information requests to solicitors filing high volumes of paddock-based mixed-use claims. Incorrect claims: penalty up to 30% (careless error) or 70% (deliberate); interest accrues from the due date; HMRC discovery assessment window 4 years (careless: 6 years; deliberate: 20 years).