With the Tax Adviser deadline approaching, when the 3 month grace period will begin for firms to register as Tax Advisers, HMRC’s increasingly robust stance on Stamp Duty Land Tax (SDLT) avoidance as they see it, is firmly supported by tribunal decisions, which demonstrate a clear judicial alignment with its policy objective: to prevent taxpayers from artificially suppressing SDLT liabilities through technical or contrived use of reliefs. MDR has already seen the chop due to its abuse, and mixed use may not be far behind.  The recent case of Sehgal v HMRC 2025 FTT does little to reassure that if a loophole is perceived by the tax payer, then someone will dive straight into it. It is expected Sehgal will be appealed by HMRC so treat the decision with caution.

Two important 2025 decisions—Sajedi v HMRC and Investment & Securities Trust Ltd v HMRC—highlight how both the courts and HMRC are focusing on substance, purpose, and real-world outcomes rather than formalistic compliance.

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A starting point is the treatment of holiday homes within the higher rates surcharge regime. The courts have consistently avoided drawing distinctions based on how a property is used. Whether a property is a lifestyle holiday home or a commercial holiday let, both will typically be treated as “additional dwellings” unless a specific relief applies. This reflects a strict statutory framework: ownership, not intention, drives the surcharge. Attempts to characterise holiday properties as commercial assets will not displace the default position unless the statutory criteria for relief are clearly satisfied.

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The decision in Sajedi v HMRC (FTT, 2025) is particularly instructive on the limits of the replacement of main residence relief. In that case, taxpayers attempted to reclaim the SDLT surcharge by transferring a 1% interest in their former homes, arguing that this constituted a “disposal” sufficient to trigger relief. The tribunal rejected this approach, applying a purposive interpretation of the legislation and emphasising that the transactions had no meaningful real-world effect. The arrangements were described as “technical” disposals that left the parties in substantially the same economic position.

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This case underscores two critical principles. First, “substance over form” is now central to SDLT analysis: token arrangements—such as nominal share transfers—are unlikely to succeed. Secondly, reliefs such as replacement of a main residence are interpreted narrowly. The court made clear that Parliament intended relief to apply where a genuine disposal occurs, not where taxpayers engineer minimal changes to satisfy the literal wording of the statute.

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A similar tightening can be seen in Investment & Securities Trust Ltd v HMRC (UT, 2025), which concerned development relief. The Upper Tribunal confirmed that relief is only available where the relevant interest is acquired exclusively for a qualifying purpose—here, property development. Where multiple purposes exist, relief will be denied. In that case, the presence of a non-commercial motive (providing funds to a connected party) was sufficient to disqualify the claim, even though development was also intended.

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The implications for holiday homes and mixed-use properties are clear. Where a property is acquired with dual motives—such as partial personal use alongside investment or letting activity—taxpayers face significant difficulty in accessing reliefs. The tribunal’s insistence on identifying the true purpose of the transaction reinforces HMRC’s broader position that mixed motives will often defeat relief claims.

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These cases also sit within a wider context of increased HMRC scrutiny: technical compliance is no longer enough.

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Taken together, Sajedi and Investment & Securities Trust Ltd demonstrate a decisive move towards a purposive, fact-driven approach to SDLT. For taxpayers with holiday homes or complex ownership structures, the risk profile has shifted. Reliefs remain available—but only where transactions reflect genuine disposals, clear commercial purposes, and alignment with the legislative intent. Artificial structuring designed to reduce SDLT exposure is increasingly unlikely to withstand challenge.

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Getting in touch

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If you would like to discuss a particular matter, please feel free to contact me at amanda@bhptax.law in the first instance. Our SDLT team can also be reached at freya@bhptax.law.

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If you would like to arrange a training session for your team on SDLT or property tax risk areas, Olivia would be very happy to assist and can be contacted at olivia@bhptax.law.