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Residential Conveyancing – The True Value of Chattels
It is vitally important to consider the true nature and value of Chattels as well as Fixtures and Fittings when considering these in relation to a property sale.
For Stamp Duty and other purposes care should be taken in deciding whether it is reasonable to make an apportionment of the price between the property being acquired and any fittings at the property. The definition of a chattel is helpfully provided by an HMRC guidance website which is as follows:
The HMRC provides, in this guidance note, a description and examples of items which can be considered as ‘fixtures or part of the land’, and therefore chargeable to tax (SDLT), as opposed to those who are considered chattels (or moveable in Scotland) and consequently not chargeable. In order for an item to be considered to be a ‘fixture’, it must be annexed to the property, such as an aga or wall-mounted oven, fitted units, fitted bathroom sanitary ware, central heating systems and intruder alarms. non-fixture items include carpets, curtains and blinds, kitchen white goods and removable gas/electric fires.
Recent case law has supported the inclusion of fitted units as annexed ‘fixtures’, chargeable to tax – in this instance the purchaser acquired a house for £250,000.00 and paid 1% Stamp Duty. The Buyer agreed to pay the Seller a further £8,000.00 for ‘fixtures and fittings’ that were listed with the Contract. The HMRC enquired about the position and concentrated on a single item in the garage being “built in units with workshop £800.00”. Apparently the units were attached and the HMRC asserted that the Buyer had acquired the property for £250,800.00 and that therefore Stamp Duty would have to be paid at 3%. This resulted in an additional tax bill of £5,024.00 for the Buyer. The Judge agreed with the HMRC.
It is vitally important to look at each case carefully in terms of the degree of annexation and permanence, as the HMRC will not provide a definitive list of items in each category, simply stating that “each case must be considered on its own merits”.