Avoiding Unnecessary HRAD Charges on a Trust & Individual Purchase
March 31, 2025
Stamp Duty Land Tax (SDLT) can be complicated, especially when trusts are involved. One of our recent clients approached us after receiving conflicting SDLT calculations from multiple solicitors, each insisting that Higher Rates for Additional Dwellings (HRAD) applied. However, due to the unusual ownership structure of the purchase, the client was left confused and unsure of the correct tax position.
The Client’s Situation
Our client was purchasing a property, but the ownership was split as follows:
🏡 50% of the property was purchased by an individual with no other property and intended to use it as their primary residence.
🏡 50% was purchased by a trust, with ownership divided between three trustees. However, two of the three trustees owned additional properties.
The challenge? Would the trustees' additional property ownership trigger HRAD on the entire transaction?
How Compass Found the Right Answer
After carefully reviewing the trust deed, our tax team identified a critical detail that had been overlooked:
👉 The trustees had no beneficial ownership of the property.
Since their personal property holdings were not relevant under SDLT rules, the transaction did not meet the conditions for HRAD.
The Outcome: A Big SDLT Saving
Before coming to Compass, the client had already accepted that HRAD would apply, but they simply wanted to confirm how much.
However, after our review:
✅ HRAD was completely inapplicable.
✅ The purchase was taxed at standard residential rates.
✅ The client saved a significant amount in SDLT they weren’t expecting.
Key Takeaway: Trusts Can Be Complex!
Solicitors are not always SDLT specialists, and trust structures add extra complexity. This case highlights why a detailed technical review is essential, especially for transactions involving trusts and mixed ownership.
💡 If you’re unsure about your SDLT position, don’t take a guess—speak to Compass. Our team will ensure you pay the right amount—no more, no less.
📩 Need an SDLT review? Get in touch today.