The Property Tax Experts
Mixed Use
If you believe your property could be considered mixed use, then get in touch with our team of property tax experts.
Mixed Use Properties
There are two types of property which could be considered mixed use.
If your company purchases a property which is a mixture of residential and non-residential you should pay SDLT at the non-residential rate. This will often reduce the amount of SDLT payable due to the fact the rates are capped at 5% as opposed to going as high 17% for a company purchase of residential property.
Mixed use will also save the higher 17% rate of SDLT which applies to certain purchases of residential property worth more than £500,000 by a company along with the Annual Tax on Enveloped Dwellings (ATED).
This could result in you saving thousands of pounds in SDLT as shown in the example below.
| Purchase Price | £1,000,000 |
| Residential SDLT with Higher Rate | £91,250 |
| Non-residential SDLT | £39,500 |
| Saving | £51,750 |
Mixed Use Properties
There are two types of property which could be considered mixed use.
A mixture of residential and commercial property.
The most common example of a mixed use property would be a shop with a flat above. In this example the non-residential rate of SDLT may apply.
However, the mere fact that part of a building had a commercial use prior to the purchase does not mean that the non-residential rates will automatically apply as demonstrated in the following case.
ANDREI TRETYAKOV v HMRC TC/2023/16164
The property had in the past been used as both commercial and residential property but prior to the taxpayers purchase the property had been completely refurbished and the ground floor which had previously been non-residential use was converted and now comprised of a garage and storage area, large bar area and games room, a wine cellar, sauna and further storage.
The previous owners had allowed part of the ground floor, namely the garage and storage area to be used by their own company however, there was no written agreement or rent paid.
When the Taxpayer bought the property he sought to argue that the property was still mixed use meaning that the non-residential rate of SDLT would apply.
The Tribunal dismissed the taxpayers appeal on the basis that the ground floor was suitable for use as a dwelling and stated that historical commercial use was just one of the factors to be considered. The Taxpayer had to pay an additional £484,250 in SDLT. This case has certainly led to some uncertainty when considering whether a commercial use at the date of purchase will be sufficient to satisfy the tribunal that the non-residential rates are applicable.
Property with some non-residential land
A residential property could also be considered mixed use if there is an element of non-residential land. To be considered non-residential HMRC would need to agree that the land did not form part of the gardens of the property, some of the main examples are:
- Land which has a commercial use;
- Large areas of land which are not necessary for the reasonable enjoyment of the residential dwelling;
- Land which is physically separate from the residential dwelling;
- Land which contains rights of way and/or public footpaths;
- Woodland.
There have been a number of appeals in relation to the question of whether a property is mixed use and many have dismissed the taxpayer’s arguments that a paddock or area of land is non-residential, however, there have been two notable decisions.
Guerlain-Desai v HMRC TC/2022/13097
This case saw a successful appeal by a taxpayer where the property consisted of land which contained public footpaths and was used by the general public. The Tax Tribunal agreed that the land did not form part of the garden of the property and the non-residential rate was correct saving the Taxpayer £225,250 in SDLT.
Suterwalla v HMRC [2024] UKUT 00188 (TCC)
This was an appeal by HMRC against an earlier decision in which the FTT found in favour of the Taxpayer and concluded that a paddock did not form part of the garden allowing the non-residential rate to be paid. The UT dismissed HMRC’s appeal and found that the FTT were entitled to find that the paddock was non-residential land saving the Taxpayer £161,250 in SDLT.
Relatus will advise whether your property will be classed as mixed use or whether it should in fact be treated as wholly residential.
The Property Tax Experts
Where might Relatus be able to help?
Reasons to use Relatus for your Property Tax
Our customers rate us an average of 4.9 on TrustPilot...
Check out the many reasons why our customers choose us. We may be slightly biased, but our TrustPilot reviews are not.
An average of 4.9 out of 5, across 225+ reviews.
Highly rated on TrustPilot
We have an average rating of 4.9 from over 225 reviews.
Over 10 years experience
We have helped people to pay the correct amount of SDLT and LTT for over 10 years.
We have the expertise
Relatus specialises in SDLT and LTT, we are made up of qualified accountants, qualified members of the Association of Taxation Technicians (ATT) and qualified (non-practicing) solicitors.
We are good at what we do
HMRC regularly agree with our position and we have recently won an appeal at the First Tier Tax Tribunal.
Flexible Fee structure
Fixed and contingent Fee arrangements available to suit our client’s preferences.
Opinion Service
We can provide full written advice to ensure that the correct amount of SDLT or LTT is paid.
Check out the SDLT rates in England
SDLT Rates in England
Want to know more?
If you have any questions about your property tax, then get in touch with our team here at Relatus who will be happy to help.
