This relief is provided by the relevant provisions of schedule 4 to the LBTT(S)A 2013.
Description of relief
Where a property trader (as defined under paragraph 25 of schedule 4 to the LBTT(S)A 2013) buys a home from a person who is buying a new home from a house building company, the purchase by the property trader is relieved from LBTT if certain conditions are met.
This relief does not apply to persons who exchange homes.
All six of the qualifying conditions must be met for the relief to be claimed:
- The acquisition of the home must be made in the course of a business that includes or consists of acquiring dwellings from persons who acquire new homes from house building companies.
The person(s) must:
- have lived in the home as their main or only residence at some time during the two years before the property trader bought it;
- buy a new home from a house building company; and
- intend to live in the new home as their main or only residence.
- The property trader does not intend:
- to spend (meaning any financial outlays in this context) more than the permitted amount on refurbishment of the home. (Refurbishment means the carrying out of works to enhance the value of the home but does not include cleaning the home or works in order to meet minimum safety standards). The permitted amount depends on the consideration for the home as follows:
Consideration for the acquisition of the home Permitted amount Not more than £200,000 £10,000 More than £200,000 but less than £400,000 5% of the consideration More than £400,000 £20,000
- to grant a lease or licence of the home, except for the grant of a lease or licence for no more than six months; or
- to permit any principal (as defined under paragraph 25 of schedule 4 to LBTT(S)A 2013) or employee, or anyone connected to them, to occupy the home.
- The area of land acquired by the property trader must not exceed the ‘permitted area’ which is 0.5 hectares (including the site of the home) or, if larger, it must be a piece of ground in keeping with the size and character of the home. In the latter case, the permitted area is to be taken as the part of the land that would be most suitable for occupation and enjoyment of the home as its garden or grounds if the rest of the land were separately occupied.
If the conditions listed above are met, but the condition relating to the permitted area of the garden or grounds is not, partial relief may be claimed. The chargeable consideration for the acquisition of the person’s home by the property trader is calculated by deducting the market value of the permitted area from the market value of the home.
Withdrawal of the relief
Relief is withdrawn if the property trader:
- spends more than the permitted amount on refurbishment of the home;
- grants a lease or licence of the home, except for the grant of a lease or licence for no more than six months; or
- permits any principal or employee, or anyone connected to them, to occupy the home.
Where one of these events occurs, the property trader must make a further LBTT return to us.
The LBTT return must identify how much tax is chargeable. Where relief is withdrawn, the amount of tax chargeable is the amount that would have been chargeable for the transaction but for the relief.
The LBTT return must be made before the end of 30 days beginning with the day after the day that the event occurred.
Claiming the relief
To claim this relief see the guidance on 'How to make a LBTT return and pay tax' which is available separately on our website.