How could pylons, pipes, and antennas on your property owe you a stamp duty refund?

David Hannah, founder of SDLT specialists, Cornerstone Tax, discusses how pylons, pipes, and antennas on your property could owe you a stamp duty refund.

Stamp duty land tax (SDLT) is a tax that – prior to the holiday – cost homebuyers £13 billion a year collectively. It has been estimated that over £3 billion worth of stamp duty was overpaid in 2015/16 due to mistakes in advice, and confusing and complex rules.

Stamp duty is a poorly understood tax, and with the nine-month holiday set to end in March 2021, this confusion amongst homebuyers around the ever-changing nature of SDLT is only likely to increase.

One lesser known intricacy of SDLT is the fact that “commercial activity” on your land turns your house into a “mixed use” one in regards to stamp duty, so you are only liable for the lower non-residential rates.

This does not mean your seller has to have run a business from the property, but rather whether the house (or its land) generates a business income. This comes in many forms, from having a commercial business operating on-site to renting or licensing part of the buildings or land to someone else to use (knows as property business income in HMRC terms).

The important thing to note is that it doesn’t matter how little of the land is used or how small the income is. The fact that any of it is, is conclusive that you shouldn’t be paying, or have paid, the residential rate.

So anything that generates an income – Field Rents, Grazing Agreements, Stable rental, Agricultural tenancies or even Wayleave Agreements, are all markers for mixed use Stamp Duty.

Wayleave Agreements essentially give rights to utility companies to install, place or run their equipment in or over the land that your property sits on, in order to provide power, water, or sewerage to the United Kingdom. Wayleave Agreements are important because they apply to the landowner and their “successors in title”, which means all those who purchase and own the property since the agreement was initially taken out.

Wayleave Agreements are fundamental in maintaining the infrastructure of the country, but new research commissioned by stamp duty advisory practice, Cornerstone Tax, revealed that 34% of British homeowners who bought homes with these features, were not advised that they could have paid a reduced rate of stamp duty at the point of purchase. This often leads to homeowners being owed tens of thousands of pounds in stamp duty refunds.

David Hannah, principle consultant and founder of Cornerstone Tax, explains:

“This research demonstrates a lack of clarity in and around stamp duty land tax, both by the public and by the legal sector. Millions of properties across the UK could qualify for reduced stamp duty rates, if for example, they have granted access to utility companies to lay cables and pipes in or over their land. In these cases, solicitors have a duty of care to inform their customers of all potential stamp duty reductions, including where Wayleave Income is present.

“In these cases, solicitors need to understand the complexities of the Wayleave Agreement and what reductions the property buyer could be entitled to. For example, when a telephone pylon is on a property but brings the telephone line into that property, it is likely that no deduction is due. But, if a property has a power pylon on the land, or cable overflight, or indeed a substation for example, then the homebuyer could be due a refund. It’s not necessarily a rural issue either – some urban properties also have these, and other features, i.e. rents, licenses and other commercial activity and these must be considered in each case. There is a question of fact and degree in every claim which a tax specialist should investigate on an individual basis.

“The mistakes being made are in almost all cases totally unintentional and otherwise made in fear of underpaying. Most legal professionals are ill-equipped to navigate the complex laws and rules around the SDLT – it is incredibly complex and many advisors who help homebuyers evaluate how much they should pay are trained only to differentiate between residential and commercial property.

“They simply aren’t familiar with the intricacies of the law’s evaluation criteria, which has led to many being mis-advised unintentionally.”

Kindly shared by Cornerstone Tax

Main article photograph courtesy of Pixabay