SDLT and the “Grounds” Question: When Does a Trout Stream Divide Residential from Non-Residential Land?

The Upper Tribunal (Tax and Chancery Chamber) (UT) on 13 March 2026 in Revenue and Customs v Brzezicki [2026] UKUT 125 (TCC), overturned the First-tier Tribunal's (FTT) decision and held that the entirety of the property acquired by Mr Brzezicki constituted residential property for Stamp Duty Land Tax purposes under Section 116(1) of the Finance Act 2003 (the “Act”).

Mr Brzezicki purchased a six-acre Hampshire property comprising a six-bedroom dwelling with a large lawned garden, separated by a man-made carrier stream from an approximately two-acre parcel of land referred to as "the island" accessible via two footbridges. The carrier stream contained engineered features designed to facilitate brown trout spawning, including a sluice, waterfall and gravel bed. No commercial use of the stream or island was taking place at completion, though Mr Brzezicki subsequently commenced a fly-fishing business.

The issue before the UT was whether the FTT erred in law in holding that the island and carrier stream were not "garden or grounds" of the dwelling under Section 116(1)(b) of the Act, thereby classifying the property as mixed-use.

The UT allowed HMRC's appeal on all three grounds. Its reasoning is instructive. First, the FTT impermissibly considered the future suitability of the land for commercial use. There being no commercial activity at completion, the only coherent reading of the "factory" characterisation was prospective, which is irrelevant per Suterwalla. Second, the FTT misunderstood contiguity. Following Hyman and How, contiguity speaks to common ownership of adjacent land, not physical separation, a six-foot stream over commonly owned land cannot sever contiguity. Third, the FTT wrongly elevated contiguity to a necessary condition rather than one factor in the multifactorial evaluative exercise confirmed in How Development 1 Ltd v HMRC. The UT found the balance of factors, common ownership, unobstructed title, physical accessibility, absence of any incompatible use at completion, and the overall visual impression supported classification as grounds.

The case firmly establishes that physical features dividing commonly owned land do not break contiguity, and that land's suitability for future commercial use is irrelevant to its SDLT classification at the effective date.

Read full case decision here