On 6 March 2025, the First-tier Tribunal (Tax Chamber) ruled against the appellants in Sajedi v Revenue and Customs Commissioners (TC09447), dismissing their claims for Stamp Duty Land Tax (SDLT) relief. The case focused on whether transferring just 1% of an existing property counted as a "disposal of a major interest", allowing the appellants to reclaim the higher-rate SDLT surcharge paid on their new homes.

Background of the Case

The case involved two sets of taxpayers who had purchased new properties and paid the higher rate of SDLT, as required for buyers who already own another residential property. However, after acquiring their new homes, they transferred a 1% share of their previous properties to their co-owners and then sought an SDLT refund, arguing that their new properties qualified as replacements for their main residences.

The transactions in question were:

  1. Phillip Hall (PH) and Trusha Pillay (TP)
    • Purchased The Manor House for £3.6 million in 2017, paying £453,750 in SDLT, which included the higher-rate surcharge for additional dwellings.
    • In 2020, they transferred 1% of their previous property (New Crane Wharf) from PH to TP and claimed that this disposal meant The Manor House was a replacement for their main residence—making them eligible for a £108,000 SDLT refund.
  2. Afshin Sajedi (AS) and Akram Rafie (AR)
    • Acquired Prestbury Road for £2.4 million in 2017, paying £275,820 in SDLT, which also included the higher-rate surcharge.
    • In 2020, they transferred 1% of their previous home (Calderbrook Drive) from AS to AR and then sought a refund of the SDLT surcharge, arguing that their new home was a replacement for their main residence.

Tribunal’s Decision and Key Findings

The tribunal considered two key issues:

  1. Whether the Finance Act 2018 amendments applied to the transactions
    • The appellants argued that because their new properties were purchased before 22 November 2017, they should be assessed under the older SDLT rules, which did not include Finance Act 2018 provisions that tightened the definition of "disposals of a major interest."
    • The tribunal agreed with the appellants, ruling that the Finance Act 2018 changes did not apply because the new property purchases predated the legislation.
  2. Whether the 1% transfers constituted a "disposal of a major interest"
    • The tribunal dismissed the appeals, ruling that transferring only 1% of a property does not qualify as a genuine disposal under Schedule 4ZA of the Finance Act 2003.
    • It found that SDLT relief is only available when there is a substantive disposal of an interest in the former home, not merely a technical or paper-based transaction.
    • The tribunal concluded that the 1% transfers had no real-world impact on ownership or beneficial rights, meaning they did not amount to genuine disposals.
    • The judgment emphasized that SDLT rules aim to prevent artificial transactions designed solely to secure tax refunds, aligning with HMRC’s anti-avoidance stance.

Implications of the Ruling

This ruling clarifies that minor property interest transfers will not qualify for SDLT relief when reclaiming the higher-rate surcharge. Property buyers, tax advisors, and investors should be aware that token transactions, such as selling 1% of a previous home to a spouse or co-owner, are unlikely to succeed in securing an SDLT refund.

Those involved in property transactions should seek proper tax planning advice to ensure compliance with SDLT regulations and to explore legitimate relief options where available.