Does the 3% SDLT surcharge apply where the purchaser is a discretionary beneficiary and the trust property includes a dwelling?


“My client is selling her main residence and purchasing a replacement on the same day.

There is a grandparent’s family trust, and the three trustees own a residential flat.

One of the trustees (my client’s father) tells me that it is a discretionary trust and my client may or may not be a beneficiary (being discretionary it’s up to the trustees whether my client is a beneficiary or not).

As my client is NOT a trustee, I think that the additional rate of SDLT does not apply to my client’s purchase.  Could you please confirm if this is your understanding, and that whether or not my client is a beneficiary of a trust is irrelevant?”

Source: BLG Member


Only where your client is a beneficiary and under the terms of the settlement is entitled to either occupy the dwelling for life or to receive the income earned in respect of the dwelling will he be treated as holding the interest in the dwelling which is subject to the trust.  However as the client is replacing her only or main residence the question of whether he is a beneficiary of the will trust is irrelevant and the additional 3% should not apply.

At the time of publication this response was correct however as tax legislation and practice change from time-to-time you should take specific advice before taking any action.

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