Please could anyone clarify…Is it the correct position that Trustees of a DPI Trust purchasing a property for the principal beneficiary will pay SDLT at higher rates?
The terms of the DPI give the trustees to give income or capital to principal beneficiary as they see fit during lifetime, but not an express right to receive income or live in property.
Any thoughts or comments would be appreciated as no specific answer in guidance or IHT manual.
Many thanks
Laura Willis
MLP Law
As you might expect, since you are asking a question about SDLT there is no guidance to be obtained from the IHT manuals.
The answer to your question can be found in Schedule 4ZA of the Finance Act 2003. The supplemental rate does not apply if the beneficiary will be entitled to occupy the property for life.
Assuming the trustees have power to do so, they may want to amend the terms of their trust prior to the acquisition, to ensure so far as they feel able to do so that they will fall within the terms of the relevant provision.
Schedule 4ZA was clearly not drafted by someone with experience of how trusts are normally drafted and operated in practice.
Interestingly, it appears that trusts cannot be ‘first time buyers’ and get the appropriate relief under Schedule 6ZA (although I would be interested in alternative views). The SDLT is not very well ‘joined up’.
Paul Davies
DWF LLP