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Disabled Persons Settlement & SDLT

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William Chalk

Posted on:
13/04/18 12:08
Subject: Disabled Persons Settlement & SDLT

Does a disabled person's settlement qualify as a life interest trust for the purposes of SDLT where the trust purchases a property for the disabled person to occupy?
If so, and the property costs less than £300,000, does it follow that if the beneficiary of the trust is a first time buyer, no SDLT will be payable under the new rules for first time buyers?
Patrick

Posted on:
13/04/18 15:17
Subject: RE: Disabled Persons Settlement & SDLT

William, the relief applies to purchasers who are individuals and there is no provision that deems purchasers who are the trustees of a settlement to be the beneficiary for the purposes of the relief. The position would be different in the case of a bare trust.
William Chalk

Posted on:
19/04/18 10:46
Subject: RE: Disabled Persons Settlement & SDLT

Thank you Patrick.
I understood that a Disabled Person's Trust under s89c IHTA would treat the disabled person as having an interest in possession for the purposes of FA 2016 Sch 4ZA para 11(1)(c) so that where the disabled person does not already own another property, the purchase of a property for the beneficiary to occupy for life would exempt the trustees from paying the 3% surcharge. Have I got this wrong?
I believed a DPI trust under s89 where the disabled person does not have an actual interest in possession would not though escape the surcharge.
Patrick

Posted on:
19/04/18 12:58
Subject: RE: Disabled Persons Settlement & SDLT

William, the deeming for IHT is only for the purposes of that act so unless you have found a read-across that applies the deeming to SDLT then I cannot see how you can treat the settlement as a life interest settlement for SDLT. It may be worth a letter to HMRC though to ask whether they would be willing to apply the IHT treatment.
William Chalk

Posted on:
19/04/18 15:08
Subject: RE: Disabled Persons Settlement & SDLT

A DPI settlement qualifying under s89B(1)(c) IHTA 1984 would require the beneficiary to have a life interest in the income of the trust fund.

FA 2016 Sch 4ZA paras 10 (1) and (3) state that a beneficiary of a settlement who is entitled to (i) occupy the dwelling for life or (ii) income earned in respect of the dwelling is, in relation to a land transaction, to be treated as the purchaser rather than the trustee being treated as such. Therefore, does it not follow that if the beneficiary with that actual IIP owns no other property, the standard rate of SDLT should apply?
Patrick

Posted on:
19/04/18 15:32
Subject: RE: Disabled Persons Settlement & SDLT

If the beneficiary has an actual IIP then that's fine. It's just that a deemed IIP for IHT will not be sufficient for SDLT.

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