Example:

Kate and Fred are the trustees of a bare trust for the benefit of Cindy. Kate and Fred, as trustees, own a dwelling which is Cindy’s only residence. Kate and Fred also own, as trustees, a dwelling which they use as a buy-to-let investment to generate income for the trust. The trustees sell Cindy's main residence and then purchase another dwelling, as trust property, that Cindy intends to occupy as her only residence.

For the purposes of the LBTT(S)A 2013, Cindy is treated as the buyer in the next main residence purchase transaction (as beneficiaries of bare trusts are treated as the buyer when a trustee enters into a land transaction). At the end of the day that is the effective date of that transaction, she also "owns" the buy-to-let dwelling (although title to the buy-to-let dwelling is registered in the Land Register in the name of the trustees, for the purposes of the LBTT(A)(S)A 2016, Cindy, as beneficiary, is deemed to be the owner ("deemed ownership")). However, as Cindy's main residence has been replaced, the ADS will not apply to the next main residence purchase transaction.

Last updated: 
6 April 2016
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