We wanted to bring to your attention an important recent judicial development concerning Stamp Duty Land Tax (“SDLT”) treatment of uninhabitable property claims, which may impact the advice being given to clients regarding potential pre-completion and refund opportunities.
As detailed in a recent article from the Chartered Institute of Taxation, the Court of Appeal in: Amarjeet and Tajinder Mudan v HMRC [2025] EWCA Civ 799 stated that it has issued a significant ruling that challenges the legitimacy of many SDLT refund claims previously made on the basis of classifying residential properties as mixed-use or non-residential.
The qualificative factors are now:
- There is actual, active non-residential use at the point of completion;
- Passive or incidental land use is not enough – features such as:
- Grazing land with no formal lease or clear commercial arrangement;
- Footpaths, bridleways, or rights of way;
- Undeveloped paddocks or woodland with no income-generating use; and
- Driveways, access lanes, or common parts.
Do not meet the threshold for non-residential classification unless there is clear evidence of actual commercial exploitation or distinct, separate usage.
- Land must form a truly separate non-residential unit – the judges stressed that simply having land “appurtenant” to the main dwelling does not make it non-residential. For a claim to succeed, there must be:
- A distinct boundary;
- Independent access; and
- Clear separation in terms of use and purpose.
This judgment sets a clearer precedent on what qualifies as non-residential use, particularly with respect to the inclusion of elements like grazing rights, shared access ways, or minimal commercial activity that had previously been used to reclassify properties. The Court of Appeal found such claims to be largely without merit unless there is genuine and substantive non-residential use.”
