Last week HMRC issued new guidance on the SDLT treatment of fixtures and chattels in property transactions, providing further clarity on how consideration should be apportioned between fixtures, which are chargeable, and chattels, which are not.
The update reinforces a stricter and more evidence-based approach to apportionment, and signals a continued willingness to challenge artificial reductions in SDLT liabilities.
HMRC reiterates that SDLT is charged only on the land element of a transaction, and not on separate payments for chattels. However, where a single purchase price covers both, a “just and reasonable apportionment” must be made.
The guidance confirms that the distinction between fixtures and chattels depends on the degree of attachment to the property, and purpose of that attachment. The law applies this two-stage test to determine whether an object is a fixture or a chattel. Where there is a conflict between the two tests, the purpose of annexation is the conclusive test. If the purpose of annexation is for the better enjoyment of the land rather than the items themselves, these items are generally classified as fixtures.
Items forming part of the property, such as fitted kitchens, bathroom suites and central heating systems, will typically be treated as fixtures, and will be included in the contract for sale. By contrast, moveable items like carpets, curtains and freestanding appliances are generally chattels. HMRC notes that it is unable to provide an exhaustive list, emphasising that each case must be assessed on its own facts.
A key message in the updated guidance is that evidence is critical. HMRC states that a deduction for chattels will only be accepted where the apportionment arises from a genuine, separate negotiation, and is supported by contemporaneous documentation, such as a contract clearly identifying and pricing individual items. Simply asserting that chattels were included in the sale, or retrospectively attributing value to them, will not be sufficient.
The guidance also reinforces HMRC’s expectations on valuation. Any allocation to chattels must reflect open market value at the effective date of the transaction, and the age, condition and depreciation of the items. HMRC expressly notes that these values will often be significantly lower than original purchase price, which may limit the scope for meaningful SDLT savings.
HMRC makes clear that apportionments for chattels are an area of scrutiny. The guidance confirms that HMRC may open enquiries into transactions where deductions for chattels have been made, and challenge whether items have been correctly classified or valued.
There has been a significant rise in third‑party “refund agents” approaching homeowners after completion to suggest that SDLT was overpaid. In practice, these schemes tend to operate as follows:
1. Approach after completion
- Using Land Registry data, agents identify recent purchasers and make unsolicited contact suggesting a refund may be available.
- HMRC and the Law Society have both indicated that this is a common tactic used by unregulated repayment agents.
2. Re-engineering the purchase price
- The agent asserts that part of the original purchase price should be retrospectively attributed to chattels (e.g. carpets, curtains, light fittings).
- This relies on the correct principle that SDLT is payable only on land, but applies it after the event, often without contemporaneous evidence.
3. Refund paid first (‘pay now, check later’)
- In many cases, HMRC initially processes SDLT amendment claims without a detailed review.
- A refund may therefore be issued relatively quickly, creating the impression that the claim has been accepted.
- However, this is not an approval, only an administrative processing step.
If HMRC concludes that a claim is incorrect because, for example the chattels were already reflected in the original purchase price or the allocation was not “just and reasonable”; then the consequences fall squarely on the buyer.
The buyer (not the agent) will be required to repay the full refund, pay interest, and potentially face a financial penalty, which can be significant. By that stage the refund agent will typically have already taken its percentage-based fee and this fee is usually not refundable, even if the claim fails.
A further complication is the potential Capital Gains Tax (CGT) impact on sellers. If part of the consideration is attributed to chattels those items are treated as separate assets for tax purposes and any gain realised on their disposal will not benefit from Principal Private Residence (PPR) relief, which generally applies only to the dwelling itself.
This means that allocating significant value to chattels may expose the seller to CGT and the tax analysis becomes more complex, particularly where higher-value items are involved. Homeowners may need to take separate tax advice before agreeing any allocation of value to chattels.
HMRC's updated guidance serves as a reminder that attempts to reduce SDLT through allocating value to chattels must be approached with caution. Contracts should include a clear and itemised schedule where chattels are involved, and valuations should reflect defensible market values. HMRC confirms that the apportionment of consideration is an area that may be subject to enquiry and where claims are made for chattels, HMRC may investigate whether the items were correctly classified and the values used were reasonable. Chattels-based SDLT planning will be closely scrutinised, particularly where undertaken retrospectively. While refund agents may present these claims as low-risk opportunities, the reality is that they often expose homeowners to repayment, interest and penalties, leaving them worse off overall.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
[View Source]
