SDLT – fixtures and fittings

December 2023/January 2024 | Tax - SDLT

HMRC have made an inconsequential change to its SDLT manual (SDLTM04010 – Scope: How much is chargeable: fixtures and fittings). But this seems like an appropriate point to remind all conveyancers that they should read the manual to ensure that apportionments are being appropriately dealt with in sale contracts. A failure to do so could result in fraud on the Revenue.

By virtue of FA03/SCH4/PARA4 a just and reasonable apportionment is required where a price is paid partly for a land transaction and partly for a non-land transaction such as the purchase of chattels. For an item to be regarded as a fixture or part of the land and therefore chargeable to SDLT, as opposed to a chattel which is not chargeable, it must be attached to the property. The issue will then turn on the degree and purpose of the attachment, with emphasis being placed in many cases on purpose. Practitioners might want to note the following key points:

Simply showing that there were some chattels in the property when it was sold would not be considered sufficient evidence. The sale contract should make it clear whether contents were included in the sale or not.

It does not matter that the parties to a transaction may agree a particular apportionment which is then documented in the contract. The apportionment will not be correct unless it was arrived at on a just and reasonable basis. HMRC’s view is that the valuation of any chattels should represent the open market value (including depreciation) at the effective date of the transaction (EDT), bearing in mind the age, quality and condition of each item.

The following items are, however, confirmed as being assets that will normally be regarded as chattels (ie tangible, moveable assets):

  • carpets (fitted or otherwise);
  • curtains and blinds;
  • free-standing furniture;
  • kitchen white goods (unless fully integrated);
  • electric and gas fires (provided that they can be removed by disconnection from the power supply without causing damage to the property); and
  • light shades.

On the other hand, the following items will not normally be regarded as chattels:

  • fitted kitchen units, cupboards and sinks;
  • agas and wall mounted ovens;
  • fitted bathroom sanitary ware;
  • central heating systems; and
  • intruder alarm systems.

Source: www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm04010.


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