SDLTM29855 | Definition of a first-time buyer – Previous acquisition by a Bare Trust

Relief is not denied by virtue of a previous acquisition as a trustee of a bare trust, unless the purchaser was also a beneficiary of the trust.

Relief will not be available where there has been a previous acquisition of a major interest by a bare trust and the purchaser was a beneficiary of that trust.

Before 6 March 2024, special rules in Schedule 16 applied where the previous acquisition by the bare trust was of a new lease. In those cases an individual who had previously been the beneficiary of a bare trust which had acquired a new lease in a dwelling would still be considered a ‘first-time buyer’ in relation to future purchases of a dwelling. This was due to special rules which meant that the beneficiary was not considered to have been the purchaser of the dwelling (paragraph 3(3) of Schedule 16) with the trustees treated as purchaser instead.

These special rules no longer apply for land transactions with an effective date of 6 March 2024 or later. Entitlement to ‘first-time buyers’ relief is determined in relation to the beneficiary of the bare trust, not the trustee. As with the general rules relating to the relief, where there is more than one beneficiary, each of them must meet the conditions to claim the relief.

For the definition of a bare trust see SDLTM31710.

Example:

‘A’ acquired a major interest in a dwelling as a bare trustee for ‘B’, who occupied it. Both ‘A’ and ‘B’ are now acquiring dwellings in their own names for their own occupation.

· ‘A’ qualifies for relief as their previous acquisition as bare trustee is ignored.

· ‘B’ does not qualify for the relief as they are already deemed to have acquired a dwelling for SDLT purposes.