SDLT Higher Rate Relief Denied Where Connected Person Occupies Property

The First-tier Tribunal (FTT) delivered its judgment in Mayfair Avenue Limited v Revenue and Customs [2024] UKFTT 430 (TC) on 23 May 2024, establishing that relief from the higher rate of stamp duty land tax (SDLT) is unavailable for a company when a connected person intends to occupy the property, even temporarily. The case clarifies the application of Paragraph 5(2) Schedule 4A of Finance Act 2003 (the “act”) and confirms that the FTT has no statutory power to allow relief on fairness grounds.

Mr. Ali was the owner of 94 Mayfair Avenue, which he occupied as his family home. He subsequently incorporated Mayfair Avenue Limited (MAL), through which the property was acquired for £650,000 and standard SDLT of £27,000 was duly paid. Following completion, him and his family continued to occupy the property until relocating to a new residence. During this period, he paid market rent to MAL, and the company’s stated intention was to hold the property as a rental investment.

HMRC issued a closure notice, concluding that the higher 15% SDLT rate applied, resulting in additional SDLT of £70,500. After HMRC upheld its position following review, Mr. Ali appealed to the FTT.  

The FTT dismissed the appeal. It held that the purchase of a £650,000 property by a company constituted a high‑value residential transaction and that Mr Ali, as sole director, was a connected person and hence a non‑qualifying individual. As the company intended to allow him to reside in the property until his new home was ready, the property was not acquired exclusively for rental purposes and relief under Paragraph 5(1) was precluded. The 15 % SDLT rate therefore applied and HMRC’s assessment was upheld. The FTT noted that the lack of financial gain to Mr Ali and his payment of market rent were irrelevant as the legislation focuses solely on the intention to permit occupation by a connected person. The FTT also confirmed it lacked power to provide discretionary relief on fairness grounds, following precedents in Beadle v HMRC and KSM Henryk Zeman SP Z.o.o. v HMRC.

The decision underscores that companies purchasing high‑value residential property must ensure that no connected person will occupy the property if they wish to claim relief from the higher rate of SDLT. Temporary occupation by directors or other connected persons will trigger the higher rate, regardless of rental intentions or perceived unfairness.

Read the full decision of "Mayfair Avenue Ltd v Revenue and Customs" here.