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Dwelling
Practical Law UK Glossary 8-107-6165 (Approx. 5 pages)
Glossary
Dwelling
For value added tax (VAT) purposes, a building is designed as a dwelling (or a number of dwellings) if the following conditions are satisfied:
- The dwelling consists of self-contained living accommodation.
- There is no provision for direct internal access from the dwelling to any other dwelling or part of a dwelling.
- The separate use, or disposal of the dwelling is not prohibited by the term of any covenant, statutory planning consent or similar provision.
- Statutory planning consent has been granted in respect of that dwelling and its construction or conversion has been carried out in accordance with that consent.
The construction or conversion of a non-residential building to a building designed as a dwelling or a number of dwellings includes the construction or conversion of a non-residential building to a garage provided that both the following are satisfied:
- The dwelling and the garage are constructed or converted at the same time.
- The garage is intended to be occupied with the dwelling or one of the dwellings.
For stamp duty land tax (SDLT) purposes, although the term dwelling is not defined, HMRC considers it to mean "a building, or a part of a building that affords those who use it the facilities required for day-to-day private domestic existence and a sufficient degree of permanence" and includes buildings under construction being built or adapted for use as a dwelling (see HMRC: SDLTM00372). The definition of residential property provides that buildings used for the following purposes are treated as dwellings (other than for the purposes of the supplemental 3% SDLT charge on additional residential property and the 2% surcharge for non-resident transactions):
- Residential accommodation for school pupils.
- Residential accommodation for students (other than halls of residence for students in further or higher education).
- Residential accommodation for members of the armed forces.
- An institution that is the sole or main residence of at least 90% of its residents and does not fall within the list of buildings not treated as dwellings set out in section 116(3) of the Finance Act 2003.
(Section 116(2), Finance Act 2003.)
In the context of the supplemental 3% SDLT charge, the 2% surcharge for non-resident transactions and multiple dwellings relief, a dwelling includes:
- An existing building (or part of a building) that is used or suitable for use as a single dwelling or is in the process of being constructed or adapted for use as such.
- Land that is, or is to be, occupied or enjoyed with a dwelling as a garden or grounds (including any building or structure on such land)).
- Land that subsists (or will subsist) for the benefit of a dwelling.
- An interest in a building (or part of a building) that is to be constructed or adapted for use as a single dwelling, where construction or adaptation has not yet begun but the contract has been substantially performed).
(Paragraph 18, Schedule 4ZA, paragraph 20, Schedule 9A and paragraph 7, Schedule 6B, Finance Act 2003.)
For more information on residential property, the supplemental 3% SDLT charge and multiple dwellings relief, see Practice notes, SDLT and residential property SDLT: supplemental 3% charge on additional residential property and SDLT: multiple dwellings relief.
For land transaction tax (LTT) purposes, the main definition of dwelling is contained in section 73 of the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (LTTA 2017). This is subject to modifications for the purposes of multiple dwellings relief and the supplemental 3% LTT charge on additional residential property (paragraph 36, Schedule 5, and paragraphs 3(7) and 8, Schedule 13, LTTA 2017).
The main definition provides that a dwelling is any residential property comprising a single dwelling (section 73, LTTA 2017). Buildings used for any of the following purposes are treated as dwellings (other than for the purposes of the surcharge):
- Residential accommodation for school pupils.
- Residential accommodation for students (other than halls of residence for students in further or higher education).
- Residential accommodation for members of the armed forces.
- An institution that is the sole or main residence of at least 90% of its residents and does not fall within the list of buildings not treated as dwellings set out in section 72(5) of LTTA 2017.
(Section 72(4), LTTA 2017.)
In the context of the supplemental 3% LTT charge and multiple dwellings relief, paragraph 36 of Schedule 5, and paragraphs 3 and 8 of Schedule 13, to LTTA 2017 define what constitutes a dwelling, including:
- An existing building (or part of a building) that is used or suitable for use as a single dwelling or is in the process of being constructed or adapted for such use.
- Land that is, or is to be, occupied or enjoyed within a dwelling as a garden or grounds (including any building or structure on such land).
- An interest in a building (or part of a building) that is to be constructed or adapted for use as a single dwelling, where construction or adaptation has not yet begun but the contract has been substantially performed.
For more information, see Practice note, Welsh land transaction tax (LTT): overview: Dwelling.
Although there are obvious similarities between the definitions of dwelling for VAT, SDLT and LTT, these are not interchangeable and it should not be assumed that the definition of dwelling for one tax applies for the purposes of another tax.