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Q&As
Stamp Duty Land Tax on Replacement Dwelling
We intend to demolish our existing house, divide the plot to build multiple units; but retain one plot and the new house built on it as a "replacement" dwelling (we have planning permissions).
As we are effectively not moving our Primary Residence (although we will obviously have to vacate for 12-15 months whilst the works are undertaken), I assume this does not count as a new purchase and so no SDLT is due?
We own a small flat elsewhere (bought just before the new 3% BTL surcharge came into effect), but from what I can see this does not mean our replacement Primary Residence counts as a 2nd home purchase either.
Advice welcome! Thanks D
2 Answers
You need to take advice here from an accountant. But my understanding is that no SDLT will be payable on your land because you already own it and instead have just secured consent effectively in your garden.
Your current home is being demolished to make way for the new properties and one of these is to be your new replacement home, allocated as your principal private residence (PPR). So the tax treatments you need to be concerned about are not SDLT but instead capital gains (CG) and income tax (IT).
If you build the other units to sell (as a developer) then you will be subject to either CG and/or IT depending on how this is procured. You should also double check your position in terms of (sub) contractor tax deductions (CIS) as your status as a builder/developer will need to be established.
– Tim Doherty, Build It expert
Thanks! We have decided to split the original plot, keep enough for our new house and sell the rest to a developer to build on. We believe that this (under PPR rules) means we will have no CGT or Income Tax liability for the land sales nor SDLT for the build on the retained plot. We are consulting with a Property Tax specialist to confirm.