We have an existing discretionary trust, the trustees being myself, my wife and my son. It is intended that the discretionary trust will purchase a property in Manchester for my son. I do not own any property but have done so. My wife owns a property. My son does not own any property. Because of the previous or present ownership of property by two of the trustees, does this affect the stamp duty land tax (SDLT) payable, and notwithstanding that this is a discretionary trust purchase, will the SDLT surcharge therefore apply? If the surcharge is payable because of the present or past ownership of property by two of the trustees, would this alter if my wife and I resigned as trustees and a further trustee was appointed in our place? 

Arthur Weller replies:  

See HMRC’s Stamp Duty Land Tax Manual at SDLTM09815, where it states: 'Trusts. Where a dwelling is owned by another person subject to a trust which gives an individual a right to occupy the dwelling for life or the right to the income earned in respect of the dwelling, that individual is treated as owning the interest…This treatment will not apply to interests in dwellings which are trust property of a trust that gives the trustee a discretion to apply income between a class of beneficiaries or a trust which accumulates income’. So, since the intention is to set up a discretionary trust, the property being purchased will not relate to you, your wife or your son, and so there is no SDLT surcharge.