The Court of Appeal has handed down a significant decision in what counts as a “dwelling” for Stamp Duty Land Tax (SDLT) purposes and it could have big implications for buyers.

On 27 June 2025, the Court of Appeal upheld the decisions of the First-tier Tribunal and Upper Tribunal (Tax Chamber) in the landmark case of Mudan v HMRC. The ruling takes a restrictive approach to the residential property test for stamp duty land tax (SDLT).

Under the law, if a property is not “suitable for use” as a dwelling, the lower non-residential SDLT rates can apply. This can mean substantial tax savings, especially for purchases that would otherwise attract the higher residential rates.

However, the Court confirmed that even if a building needs extensive renovation, it will usually still be treated as suitable for use as a dwelling if it was last used as one. The only exceptions are properties with serious structural defects that make them dangerous or in need of demolition.

SDLT classification matters and the scope for arguing “non-residential” status is narrower than you might expect.

If you’re purchasing a property and are unsure about its SDLT classification, speak to our tax specialists John Feaster or Kieran Berry before you complete. The right advice at the right time could save you a significant amount in tax.