SDLTM29861 | Definition of a first-time buyer – Previous acquisition by a Settlement

Relief is not denied by virtue of a previous acquisition as a trustee of a settlement.

Relief is not denied to a purchaser by virtue of a previous acquisition by a settlement where that purchaser was a beneficiary of that settlement, unless property held by the settlement means the purchase is a higher rates transaction for the purposes of paragraph 1 of Schedule 4ZA, see SDLTM09815.

For the definition of a settlement see SDLTM31720.

Example 1:

‘A’ (and others) acquired a dwelling as a trustee of a discretionary settlement. They were also one of the beneficiaries. ‘A’ is now acquiring a dwelling in their own name for their own occupation.

· Relief is available to ‘A’ whether they occupied the trust dwelling or not.

Example 2:

‘B’ (and others) acquired a dwelling as a trustee of an interest in possession settlement. ‘B’ did not hold the interest in possession. ‘B’ is now acquiring a dwelling in their own name for their own occupation.

· Relief is available to ‘B’ on their personal acquisition.

Example 3:

‘C’ ‘D’ and ‘E’ are trustees of an interest in possession settlement. They purchase a property for the beneficiary, ‘F’, to occupy. ‘F’ has no prior interest in a property.

· Relief is not available on the purchase as the trustees are treated as the purchasers and will not occupy the property as their own or main residence.

‘F’ is now acquiring a dwelling in their own name for their own occupation. ‘F’ asks the trustees to rent out the property.

· Relief is not available to ‘F’ on their personal acquisition as they are treated as holding an interest in a dwelling under Schedule 4ZA, so the transaction would be a higher rates transaction and relief would be precluded under Schedule 6ZA paragraph 1(7).

If the trust property had been sold, rather than let, with ‘F’ subsequently purchasing a dwelling in their own name for their own occupation, the relief would apply as ‘F’ was never treated as the purchaser of the trust property and the higher rates would not apply to the purchase of the new property.