Stamp Duty Land Tax (SDLT) and Fixtures and Fittings

September 25, 2014

Stamp Duty Land Tax (SDLT) is charged on the price paid for land, which includes any buildings or fixtures. An item must be annexed to a property in order for it to be classed as a fixture to the land, and therefore taxable. In most cases there is emphasis placed on the purpose as well as the degree of the annexation. HM Revenue and Customs (HMRC) notes that any plants or heavy machinery which is either integral to the land or a building, or whose removal would cause damage to the land or building, will most likely be classed as a fixture. 1

Where there is an amount properly attributed to chattels (often referred to as ‘fittings’) included in the purchase price of a property, this amount is not charged to Stamp Duty Land Tax (SDLT). HMRC claims that this is an ever-evolving area of law, and as such each case is to be decided on its own  facts and merits. Therefore there is no comprehensive list of items that are classed as chattels. 2

HMRC has, however, confirmed that the following items are generally classed as chattels:

• Carpet (fitted or otherwise);
• Curtains and blinds;
• Free standing furniture;
• Kitchen white goods;
• Electric and gas fires (provided that they can be removed by disconnection from the power supply without causing damage to the property);
• Light shades and fittings (unless recessed). 3 It has also confirmed that the following are not usually considered to be chattels:
• Fitted kitchen units, cupboards and sinks;
• Agas and wall mounted ovens;
• Fitted bathroom sanitary ware;
• Central heating systems;
• Intruder alarm systems;
• Any plants, shrubs or trees growing in the soil which forms part of the land. 4

In some property sales, the vendor will not wish to take the entire contents of a property with them, which may be reflected in the purchase price. The legislation on SDLT states that if consideration is attributable partly to a land transaction and partly to another matter, the payment shall be apportioned between them on a “just and reasonable basis”. 5 This can potentially mean a purchaser can save in the way of the amount of SDLT payable, by allocating a proportion of the purchase price to the included chattels. However, even if the vendor and purchaser include an agreed amount to be allocated for chattels in the contract of sale, if HMRC carries out a subsequent enquiry into the land transaction return on the property it may adjust the allocation. 6

For example, in the case of Orsman v Revenue & Customs [2012] UKFTT 227 (TC), the appellant had purchased a property for £258,000 and apportioned £250,000 to the land and £8,000 to chattels. When HMRC enquired into the land transaction return it found that built-in fitted garage units valued at £800 were actually fixtures rather than chattels. This consequently increased the SDLT rate from 1% to 3%. Therefore caution is required of apportionments that are on or near any SDLT threshold.

For further information please contact Patricia Cronin at p.cronin@cfrlaw.co.uk
Please note; the content of this article is for information purposes only and further advice should be sought from a professional legal advisor before any action is taken.
Please contact Cleaver Fulton Rankin on 028 9027 3141 or alternatively visit www.cfrlaw.co.uk

1 <http://www.hmrc.gov.uk/manuals/sdltmanual/sdltm04010.htm> accessed on 23 September 2014
2 Ibid
3 Ibid
4 Ibid
5 Finance Act 2003, Sch 4 para 4(1)
6 <http://www.taxinsider.co.uk/1039-How_to_reduce_SDLT_allocating_money_to_chattels.html> accessed on 24
September 2014