What rate of Stamp Duty Land Tax (SDLT) applies on the purchase of a Bed & Breakfast (B&B)?

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I am acting for a client buying a property run as a Bed & Breakfast (B&B). I understand that my client intends to continue this. She will live in part of the house.

I presume that SDLT will be payable at the non-residential rate. Is this correct please?

 

 

If the property is entirely ‘residential’ as defined in section 116(1) FA 2003 the Table A (residential) rates will apply.

‘Residential property’ means:
a) a building that is:
i) used as a dwelling, or
ii) suitable for use as a dwelling, or
iii) in the process of being constructed or adapted for such use,
and
land that is or forms part of the garden or grounds of a building within paragraph (a) (including any building or structure on such land), or
an interest in or right over land (such as a restrictive covenant) that subsists for the benefit of a building within paragraph (a) or of land within paragraph (b)’.

Building includes part of a building.

It’s a difficult call and will, I think, depend on the extent to which the house has been modified for B&B use so as to take away the ‘dwelling’ element. There is no definition of dwelling but the OED defines a dwelling as a ‘place of residence, a dwelling-place …’

HMRC’s SDLT manual (at SDLTM00365) says:

‘Cases involving bed and breakfast establishments or guest houses will be treated on their merits. However, a bed and breakfast (B&B) establishment which has bathing facilities, telephone lines etc installed in each room and is available all year round would be considered non-residential.’

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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