Bonsu v HMRC: FTT Confirms Residential SDLT Rates for a Leasehold Flat With a Communal Garden Easement

The First-tier Tribunal (Tax Chamber) released its decision in Bonsu v HMRC on 26 February 2024, with the citation [2024] UKFTT 158 (TC) and the case number TC09084. Tribunal Judge Richard Chapman KC presided. The decision is published at caselaw.nationalarchives.gov.uk/ukftt/tc/2024/158. The Tribunal dismissed the taxpayers' appeal against an HMRC closure notice applying residential SDLT rates to the acquisition of a long leasehold interest in a flat, where the lease included an easement granting use of the communal garden of the building. This page sets out the fact pattern, the statutory pinpoint that decided the case, the wider FTT case-law context, and the practical implications for leasehold flat buyers approached by SDLT-refund-claim firms pitching mixed-use claims on this architecture.

The fact pattern in Bonsu

The Bonsu appellants acquired a long leasehold interest in a flat. The lease, as drafted in the standard way for leasehold flat conveyancing, included a right (an easement) for the leaseholder to use the communal garden of the building, in common with other residents. The communal garden was an amenity feature of the residential block. On the SDLT return filed by the conveyancer, the taxpayers (acting on advice that the page does not name) claimed the transaction qualified for mixed-use treatment under FA 2003 s.55 Table B, on the basis that the easement covered land that was not residential property in the meaning of FA 2003 s.116.

HMRC opened an enquiry under FA 2003 Schedule 10 paragraph 12 and issued a closure notice applying residential rates under Table A. The taxpayers appealed to the First-tier Tribunal. The single issue at the hearing was whether the transaction was residential (Table A rates applied) or mixed-use (Table B rates applied). The Tribunal held it was residential and dismissed the appeal.

The statutory pinpoint: FA 2003 s.116(1)(c)

FA 2003 s.116 defines residential property by reference to three categories. The relevant sub-paragraphs are:

• s.116(1)(a): a building that is used or suitable for use as a dwelling, or is in the process of being constructed or adapted for such use;
• s.116(1)(b): land that is or forms part of the garden or grounds of a building within paragraph (a) (including any building or structure on such land);
• s.116(1)(c): an interest in or right over land that subsists for the benefit of a building within paragraph (a) or of land within paragraph (b).

Verbatim at legislation.gov.uk/ukpga/2003/14/section/116 (verified 2026-05-26).

Sub-paragraph (c) is the operative deeming provision for easements. An easement (the textbook category of "an interest in or right over land that subsists for the benefit of" identified land) that benefits a residential building, or its garden or grounds, is itself residential property for SDLT purposes by direct statutory deeming. The Tribunal in Bonsu noted that s.116(1)(c) does not require the right to be exclusively for the benefit of the dwelling: the deeming is direct on any easement that subsists for the benefit of residential property.

This is the distinctive statutory pinpoint that decides this category of case. The wider mixed-use case-law (the Hyman / Mudan trajectory on grounds-classification) examines s.116(1)(b). The leasehold-with-easement cases (Bonsu and Sexton) operate on s.116(1)(c) directly. The two sub-paragraphs work together: the easement is residential property under (c) because it subsists for the benefit of a building within (a) or land within (b).

The single-main-subject-matter analysis

The Tribunal also addressed the single-transaction analysis under FA 2003 Schedule 4 paragraph 1, which treats chargeable consideration as referable to the main subject matter of the transaction. The main subject matter in Bonsu was the leasehold flat. The communal-garden easement was acquired as part of the same transaction and was not a separate transaction. The chargeable consideration paid by the appellants was paid for the lease, and the easement was a benefit attached to the lease.

Even setting the s.116(1)(c) statutory deeming aside, the single-transaction analysis would have produced the same outcome: the lease was the operative subject of the transaction, and the easement followed it. The Tribunal's reasoning therefore operates at two independent levels (the statutory deeming and the single-main-subject-matter analysis), each of which independently supports the residential treatment.

Bonsu sits alongside Sexton on the same sub-line

Sexton v HMRC [2023] UKFTT 73 (TC) (TC08708, decision released 19 January 2023) is the earlier sister case on the same s.116(1)(c) point. The Sexton appellants also argued that a communal-garden easement on their leasehold flat brought the transaction within mixed-use treatment. The FTT in Sexton dismissed the appeal on the same statutory reasoning: the easement subsisted for the benefit of the residential leasehold and was itself residential property under s.116(1)(c). Bonsu followed Sexton on the line precedent.

The two decisions read together establish a consistent FTT position on the leasehold-with-communal-garden-easement sub-line. Bonsu is the more recent of the two and contains fuller reasoning on the s.116(1)(c) statutory pinpoint; Sexton is the line precedent. There is no contrary FTT line on the same fact pattern of which the writer is aware.

Place in the wider FA 2003 s.116 case-law narrowing trajectory

The FA 2003 s.116 residential / mixed-use boundary has been the subject of a series of FTT and Upper Tribunal decisions since 2019. The case-law has narrowed the scope for mixed-use treatment across four distinct sub-lines:

• Grounds-classification sub-line: Hyman & Goodfellow v HMRC [2021] UKUT 68 (TCC), affirmed [2022] EWCA Civ 185. The Upper Tribunal applied the "in principle suitable" test under s.116(1)(b) and confirmed that land which forms part of the garden or grounds of a residential building is residential property even if it has other uses or features. Followed by Mudan v HMRC on the proposition that state of disrepair alone does not move a property out of residential treatment.
• Paddock-and-grazing-licence sub-line: Suterwalla v HMRC [2024] UKUT 188 (TCC). UT considered whether a paddock with a grazing licence carved out a commercial element of the transaction. The licence was a private arrangement and did not strip the land of its character as part of the residential grounds.
• Public-rights-of-way sub-line: Averdieck v HMRC. The FTT held a public footpath across the grounds did not strip the underlying land of residential character. See our Averdieck case analysis page.
• Leasehold-with-easement sub-line: Bonsu v HMRC [2024] UKFTT 158 (TC) and Sexton v HMRC [2023] UKFTT 73 (TC). FTT held a communal-garden easement subsisting for the benefit of a leasehold flat is itself residential property under s.116(1)(c) and the lease-plus-easement is a single residential transaction.

Across all four sub-lines, the FTT has consistently narrowed the scope for mixed-use treatment. The wider doctrine is summarised on our SDLT mixed-use property classification page. Hortons Hall v HMRC, a separate FTT decision on the grounds-classification sub-line involving a substantial estate fact pattern, is covered on our Hortons Hall case analysis page.

The numerical incentive for taxpayers to push a mixed-use argument

Residential SDLT under FA 2003 s.55 Table A and mixed-use SDLT under Table B produce different figures on the same chargeable consideration. Post 1 April 2025 the standard residential rate table is: 0% on the first £125,000; 2% on £125,001 to £250,000; 5% on £250,001 to £925,000; 10% on £925,001 to £1,500,000; and 12% on the portion above £1,500,000. The mixed-use Table B rates are: 0% on the first £150,000; 2% on £150,001 to £250,000; and 5% on the portion above £250,000.

For an illustrative £1.2 million leasehold flat purchase by a sole owner-occupier with no additional dwellings:

• Residential SDLT under Table A: £61,250 (0% on £125,000 + 2% on £125,000 = £2,500 + 5% on £675,000 = £33,750 + 10% on £275,000 = £27,500).
• Mixed-use SDLT under Table B: £53,500 (0% on £150,000 + 2% on £100,000 = £2,000 + 5% on £950,000 = £47,500).
• Headline differential: approximately £7,750 in favour of mixed-use treatment.

Where the buyer also attracts the 5% additional dwellings surcharge under FA 2003 Schedule 4ZA (because they already own a dwelling at the effective date of the transaction, and the purchase is of an additional dwelling), the incentive sharpens significantly. The 5% surcharge under Schedule 4ZA applies only to residential transactions; mixed-use treatment under Table B disapplies the surcharge entirely. On a £1.2 million purchase, the surcharge differential is 5% of £1.2 million, or £60,000. The 5% surcharge rate is the rate in force from 31 October 2024 (FA 2025 s.51); it replaced the earlier 3% rate.

The cumulative incentive for a buyer with an additional dwelling to push a mixed-use argument on a £1.2 million leasehold flat purchase therefore approaches £67,750. This is the economic backdrop against which the SDLT-refund-claim industry has, in some cases, marketed speculative mixed-use claims to leasehold flat buyers. Bonsu and Sexton confirm that the speculative claim does not succeed on standard communal-garden architecture.

HMRC's enquiry posture and the risk-adjusted expected value of a claim

HMRC has consistently challenged communal-garden-easement mixed-use claims, and the FTT has consistently supported HMRC's residential treatment. A taxpayer who claims mixed-use rates on a standard leasehold flat with a communal-garden easement should expect HMRC to open an enquiry under FA 2003 Schedule 10 paragraph 12 within nine months of the filing date. Discovery powers under Schedule 10 paragraph 28 allow HMRC to reach further back in time where there has been careless or deliberate behaviour.

The cost of an unsuccessful claim is the original SDLT liability (recovered with interest under FA 2003 s.87) and potential penalty exposure under FA 2007 Schedule 24. The penalty regime is the same as for income tax under-declarations: careless inaccuracy attracts up to 30%; deliberate but not concealed attracts up to 70%; deliberate and concealed attracts up to 100%. The headline mixed-use saving may be material, but the risk-adjusted expected value of the claim is poor for the standard leasehold-with-communal-garden fact pattern: low probability of success, material cost on failure.

What about other easement fact patterns?

The Bonsu / Sexton line addresses communal-garden easements on standard leasehold flats. Narrower categories of easement might support a different analysis:

• Commercial easements over income-producing non-residential land: a leasehold flat with a separate commercial easement over an income-producing yard, parking facility let to third parties, or a non-residential building used commercially, might support a different fact pattern. The s.116(1)(c) deeming would still need to be addressed (if the easement is commercial in character and does not benefit the residential building, sub-paragraph (c) does not bring it within residential property); but the wider single-transaction and main-subject-matter analyses would still apply. These fact patterns are rare.
• Easements over land in separate ownership not used as residential garden: the s.116(1)(c) deeming requires the easement to subsist for the benefit of residential property. An easement that subsists for the benefit of a separate commercial purpose, even if the dominant tenement is the leasehold flat, sits in a different statutory position.

None of these narrower fact patterns is present in standard leasehold flat conveyancing. The default position for any leasehold flat with communal-garden, common-parts, or amenity easements is residential treatment under Bonsu and Sexton.

Practical guidance for leasehold flat buyers

If you are a leasehold flat buyer approached by an SDLT-refund-claim firm pitching a mixed-use claim on the basis of communal-garden, common-parts, or amenity easement architecture, treat the pitch with serious caution. The statutory deeming at FA 2003 s.116(1)(c) is direct. The FTT case-law line (Bonsu and Sexton) is consistent. The economic incentive for the claim firm is the contingent fee on a successful refund; the economic risk on the buyer is the original SDLT liability, enquiry-handling costs, and potential penalty exposure.

Before engaging with any refund-claim pitch on this architecture:

1. Take independent advice from a chartered tax adviser or solicitor with SDLT specialism.
2. Confirm the FTT case-law position (Bonsu and Sexton on the leasehold-with-easement sub-line; the wider Hyman / Suterwalla / Hortons Hall trajectory on the broader s.116 boundary).
3. Confirm the conveyancer's original SDLT return position and check whether there is any genuinely commercial easement attached to the lease (rare on standard leasehold flats).
4. Read our SDLT refund scams page for the wider pattern of speculative claim marketing.

Statutory references

• FA 2003 s.116 "Meaning of 'residential property'": legislation.gov.uk/ukpga/2003/14/section/116 (verified 2026-05-26). Sub-paragraph (1)(c) is the operative deeming for easements.
• FA 2003 s.55 Tables A and B (residential vs non-residential / mixed-use rates): legislation.gov.uk/ukpga/2003/14/section/55
• FA 2003 s.117 "Major interest" (leasehold for a term certain of more than seven years qualifies): legislation.gov.uk/ukpga/2003/14/section/117
• FA 2003 Schedule 4 paragraph 1 (chargeable consideration referable to main subject matter of transaction).
• FA 2003 Schedule 4ZA "Higher rates for additional dwellings" (5% surcharge rate from 31 October 2024 per FA 2025 s.51): legislation.gov.uk/ukpga/2003/14/schedule/4ZA
• FA 2003 Schedule 10 paragraph 12 (enquiry within 9 months of filing date) and paragraph 28 (discovery assessment): legislation.gov.uk/ukpga/2003/14/schedule/10
• FA 2007 Schedule 24 (penalty regime for inaccuracies in documents).
• Bonsu v HMRC [2024] UKFTT 158 (TC) (TC09084, 26 February 2024, Tribunal Judge Richard Chapman KC): caselaw.nationalarchives.gov.uk/ukftt/tc/2024/158
• Sexton & Anor v HMRC [2023] UKFTT 73 (TC) (TC08708, 19 January 2023): line precedent on the same s.116(1)(c) point.
• Hyman & Goodfellow v HMRC [2021] UKUT 68 (TCC), affirmed [2022] EWCA Civ 185: grounds-classification sub-line.
• Suterwalla v HMRC [2024] UKUT 188 (TCC): paddock-and-grazing-licence sub-line.
• HMRC SDLT Manual SDLTM00385+ "Gardens and grounds": gov.uk SDLTM00385
• HMRC SDLT Manual SDLTM00370+ "Residential property definition": gov.uk SDLTM00370