Has anyone got any answers, it seems so unclear with all the information I can find.
I have a situation where a client’s relative has passed away and left a trust that included residential property. The trust is held by trustees (person A and B). The property has a life tenant (person C) who has a lifetime right to remain in that residential property until the end of the life tenancy. There are also two beneficiaries to the trust (person D and E) who have inherited the trust but cannot sell the property until the end-of-life tenancy of C – effectively remaindermen.
One of the beneficiaries of the trust (person D) wants to buy a residential property and wants to know if they qualify for FTBR and a reduction in SDLT. They have never owned a property before and have money stashed away in LISA.
I would be very grateful if anyone had any insight on if they are FTB or where to look to find the answers.
My understanding is the life tenant ‘owns’ the beneficial right in the property during their life and so the remainderman are not affected (see link and below from link) for SDLT (FTBR)
The applicability of the higher SDLT rates to beneficiaries of trusts is dependent on the type of trust in which the property is held.
The following beneficiaries are treated as owning a major interest in a dwelling held by the trust, or as the buyer or seller where a trustee buys or sells a major interest in a dwelling:
The life tenant of a life interest trust (being entitled to occupy the dwelling concerned for life and/or being entitled to income earned in respect of the dwelling).
The beneficiary of a bare trust.
Beneficiaries with interests in remainder (interests which arise on the death of a life tenant) or interests under a discretionary trust are considered too remote and are not treated as owning the trust property or as the buyer/seller if the trustee conducts such a property transaction.
Finally, it is important to note that all purchases of property by a trustee of a discretionary trust (including the first purchase) are treated in the same way as a purchase by a company i.e. automatically being subject to the higher rates of SDLT. In other words, the discretionary trust itself will bear the higher rates of SDLT, rather than the beneficiaries as is the case for life interest trusts and bare trusts.