Paying Stamp Duty Land Tax on land with no residential buildings will equate to the non-residential Stamp Duty rates.
However, if the land is included with a building then residential rates will apply, as the property will be classed as residential. If the dwelling contains a garden or some type of grounds, then this can also apply to the residential rate.
Mixed-Use Properties & Agricultural Land
Stamp Duty on agricultural land can get quite complicated when there is a building on the land and the property is used for multiple purposes.
For example, there may be a farm on the property with a farmhouse and farmland. Because one of these factors is a residential unit and the other a non-residential unit, the Stamp Duty will be calculated using mixed-use property rates. Which can be considered lower than the residential rates.
What Qualifies as Agricultural Land or Property
Knowing what qualifies as agricultural land or property is very important, especially when submitting claims to HMRC for tax exemption on agricultural land or reliefs.
Properties that qualify for APR:
- Growing of crops
- Stud farms for breeding and rearing horses
- Land currently not being farmed under the habitat scheme
- Land not being farmed under the crop rotation scheme
- Farm buildings/cottages/farmhouses
Properties that do not fall under the definition of agricultural property:
- Wind farms
- Commercial woodland
- The commercial letting of barns and cottages to non-employees of the farm
- Entertainment events
Stamp Duty Relief on Agricultural Land
Tax exemption on agricultural land, otherwise known as agricultural relief, can be due at 100% given the correct conditions are met:
- The individual who owns the land farmed it themselves
- The land was used by a different individual on a short-term grazing licence
- Was let on a tenancy that began on or after 1st September 1995
A conditional tax exemption on agricultural land may apply, allowing for Stamp Duty relief on the transfer of agricultural land. This type of relief can occur when the land is designated as a heritage asset or has significant historical or cultural value. This allows SDLT to be deferred until a future sale occurs, or the conditions are no longer met.
Consanguinity Relief
This tax relief on farmland in the UK typically only applies to land transfers, to claim this relief you must be related to the transfer of the land, or have farmed the land yourself for at least 6 years. Tax relief on farmland in the UK can also be claimed if you lease the farmland out to someone who will farm it, for a minimum of six years.
If you are farming the land yourself, you must be registered for income tax or spend at least 50% of your time farming. If you are leasing the farmland out to someone else, they must hold a specified qualification or have obtained one within four years of you purchasing the farm.
Young Trained Farmer Relief
Young-trained farmer’s relief is an effective type of tax relief on farmland in the UK, for young farmers throughout the country. For farmers to qualify for this relief, they must be under the age of 35, hold a relevant agricultural qualification and be registered for income tax. Being the head of the farm holding is another essential factor when attempting to qualify for young farmer’s relief.
Can You Claim Stamp Duty Relief on Agricultural Land?
Typically, Stamp Duty payments will not be refundable, however, there are specific circumstances which can result in a potential refund.
If the transaction of the land for whatever reason falls through, you may become eligible for a refund on the Stamp Duty you have paid. Reasons for this may be that one of the parties has cancelled their sales agreement or a legal issue has arisen, and therefore the transaction can no longer take place.
In cases where you have overpaid SDLT on the transaction of your farmhouse or land, a refund claim can be submitted. However, substantial evidence of overpayment and the reason for overpayment will be required of HMRC. As Stamp Duty laws and regulations are ever-changing, this may retroactively affect SDLT payments. CapEx Tax experts can provide the correct regulations and up-to-date information regarding Stamp Duty, which can provide a higher chance of a successful refund.
How Can CapEx Tax Specialists Help?
If you think that you could be eligible to claim stamp duty land tax relief on agricultural land then contact us today so that we can discuss your situation and prepare all of your documentation ready for you to submit your SDLT claim to HMRC.