16.4 Planning Law and Property Taxation

Statutory definition of development

Planning control bites only on development. Section 55 of the Town and Country Planning Act 1990 is the definition the SRA specification tells you to know. Planning Practice Guidance ("When is permission required?") restates it. Development includes:

• building operations (structural alterations, construction, rebuilding, most demolition);
• engineering operations (groundworks);
• mining operations;
• other operations normally undertaken by a builder;
• material changes of use of land and buildings;
• subdivision of a dwellinghouse into two or more separate dwellings (section 55(3)(a)).

If the proposal is not development, no planning permission is required (other consents may still be).

What is not development

Section 55(2) lists operations and uses that are not development. The Guidance highlights, among other things:

• interior alterations (except certain retail mezzanines that add more than 200 square metres of floorspace);
• building operations that do not materially affect the external appearance of a building;
• a change of primary use where the before and after uses fall within the same use class.

Use of land for agriculture or forestry, and buildings used for those purposes on agricultural land, also sit in the section 55(2) exclusions. Maintenance that does not materially affect external appearance is not development. Whether an alteration "materially affects" appearance is a fact-and-degree judgment, not a slogan.

Movement within a use class is not development. The Town and Country Planning (Use Classes) Order 1987 (as amended) groups uses. In England, Class E (commercial, business and service) is broad: shops, offices, restaurants, gyms, and others can sit in the same class, so a switch from office to café inside Class E is not a material change of use as a matter of the Order. Sui generis uses (pubs, hot-food takeaways, petrol stations, and others listed) sit outside the classes: a change to or from those uses is typically development and needs permission unless a permitted-development right says otherwise. Associated physical works may still be operational development even if the use change is not.

When express planning permission is not required

Section 57 says development requires planning permission, but permission can come from more than a planning application:

• a grant by the local planning authority (LPA);
• a national grant under the General Permitted Development Order (permitted development rights);
• a Local Development Order, Neighbourhood Development Order, or Community Right to Build Order;
• certain development by local authorities or statutory undertakers authorised in other ways.

So a loft conversion might be permitted development, a change within Class E might not be development at all, and a new warehouse will usually need an application. A lawful development certificate is the formal way to confirm that permission is not required or that an existing use is lawful. Other regimes still apply: listed-building consent, advertisement consent, tree protection, and building regulations.

Building regulations

GOV.UK is explicit: building regulations approval is different from planning permission; a project may need both, one, or neither. The Building Regulations 2010 cover construction, extension, and many alterations (electrics, windows, heating, roof coverings, bathrooms involving plumbing). Approval is obtained from the local authority building control body or a registered building control approver, unless a competent person scheme covers the work. Higher-risk buildings (at least 7 storeys or 18 metres, with two residential units, or a hospital or care home) go to the Building Safety Regulator. Lack of a completion certificate is a conveyancing defect on sale. On a commercial lease grant or assignment, ask who is responsible for compliance with any outstanding building-control conditions.

Enforcement: time limits and LPA powers

A breach of planning control (section 171A) is development without required permission, or breach of a condition. Enforcement is discretionary and must be expedient.

Time limits (section 171B), as explained in Planning Practice Guidance after the Levelling-up and Regeneration Act 2023, for England:

• 10 years from substantial completion for operational development substantially completed on or after 25 April 2024;
• 10 years for change of use to a single dwellinghouse where that change took place on or after 25 April 2024;
• 4 years still applies to operational development substantially completed before 25 April 2024, and to change of use to a single dwellinghouse before that date;
• 10 years for other breaches (other changes of use, and typically breach of condition).

Concealment can stop the clock (planning enforcement orders; Welwyn Hatfield / Jackson). A "second bite" notice may be issued within four years of earlier enforcement action. Wales was not put onto the same single 10-year operational/dwelling rule by that English commencement: do not recite the English 10-year operational rule as if it were the Welsh position without checking Welsh legislation on the facts.

LPA tools include: no formal action; a retrospective application and enforcement warning notice; a planning contravention notice (information); an enforcement notice (the principal tool, requiring steps to remedy); stop notices and temporary stop notices; breach of condition notices; injunctions; rights of entry; and specialist listed-building and tree notices. There is a public register of enforcement and stop notices. Failure to comply with an enforcement notice is a criminal offence. Advise a buyer accordingly: an outstanding notice is not cured by completion of a purchase.

Stamp Duty Land Tax (England) and Land Transaction Tax (Wales)

Stamp Duty Land Tax (SDLT) applies to land transactions in England and Northern Ireland. Land Transaction Tax (LTT) applies in Wales for completions on or after 1 April 2018 (Welsh Revenue Authority). Scotland uses Land and Buildings Transaction Tax, which is outside this FLK2 comparison. The specification asks for the basis of charge for residential and non-residential freehold property. Both taxes are self-assessed, charged on consideration (usually the price, including assumed debt), on a slice (progressive bands) basis.

Figures below are from GOV.UK and GOV.WALES pages opened for this section (residential SDLT rates page; non-residential SDLT rates page; LTT rates and bands; LTT overview).

Worked SDLT (residential). GOV.UK's own example: house bought for £295,000 — 0% on £125,000, 2% on the next £125,000 (£2,500), 5% on the remaining £45,000 (£2,250), total £4,750.

Worked SDLT (non-residential freehold). GOV.UK: commercial freehold for £275,000 — 0% on £150,000, 2% on £100,000 (£2,000), 5% on £25,000 (£1,250), total £3,250.

Worked LTT (residential). GOV.WALES: house for £280,000 on or after 10 October 2022 — 0% on £225,000, 6% on £55,000, total £3,300.

On assignment of an existing lease, SDLT/LTT is generally on the consideration for the assignment (the premium), not a fresh net-present-value rent charge. On grant of a new lease, both premium and NPV of rent can be in charge. Cross-border estates need a split. Always check the calculator and the effective date; do not memorise a band that you have not confirmed on the current official page.

VAT: taxable supplies, rates, and the option to tax

A taxable supply is a supply of goods or services made in the United Kingdom by a taxable person in the course or furtherance of a business (for consideration, unless the legislation provides otherwise). If the supply is taxable, VAT is accounted for at the applicable rate and input VAT may be recoverable subject to the usual rules.

GOV.UK "VAT rates" states the standard rate is 20%. The same suite of pages distinguishes:

Zero-rated is not the same as exempt. Zero-rating is a taxable supply at 0%, so a housebuilder can recover VAT on construction costs. Exemption means no output VAT and no recovery, so a landlord of an exempt office letting bears VAT on its professional fees and works.

Option to tax. HMRC's VAT Land and Property manual (VATLP22050) explains why the option exists: after 1989, many commercial land supplies became exempt, trapping input tax. A landlord of commercial land may opt to tax, notifying HMRC, so that subsequent supplies of that property become standard-rated. The client does this to recover VAT on purchase, construction, or refurbishment, and then charges VAT on rent or on a sale. The option does not generally bite on dwellings or buildings used for a relevant residential or charitable purpose. Once opted, a buyer of the commercial investment usually needs to opt as well if a transfer of a going concern treatment is sought; otherwise the price may be treated as VAT-inclusive or exclusive according to the contract — another reason the assignment contract in section 16.2 must deal with VAT expressly.

Capital Gains Tax and Private Residence Relief

GOV.UK describes Capital Gains Tax (CGT) as a tax on the gain when a person disposes of an asset that has increased in value, not on the gross sale price. Disposal includes sale, gift, swap, and compensation for destruction. Chargeable assets include UK land. Non-residents can also be in the charge on UK residential (and other UK) land; the basis of charge is still the gain, reported through the UK property account where required. Deduct allowable costs (acquisition, enhancement, certain disposal costs) and then apply any reliefs. GOV.UK's current annual exempt amount is £3,000 (£1,500 for trusts). Do not invent a CGT rate in an answer if you have not confirmed it on the current GOV.UK rates page; the SQE skill is the basis of charge and the relief, not a stale percentage.

Private Residence Relief (PRR) (GOV.UK "Tax when you sell your home") applies automatically, with no tax to pay, if all of the following are true:

• you have one home and have lived in it as your main home for the whole period of ownership;
• you have not let part of it out (a lodger does not count as letting part);
• you have not used a part exclusively for business (an occasional spare-room office does not count as exclusive business use);
• the grounds, including buildings, are less than 5,000 square metres;
• you did not buy the property just to make a gain.

Married couples and civil partners living together can have only one main residence between them at a time. If those conditions fail, a gain may still be partly relieved (periods of actual occupation plus the final period of ownership allowed by the legislation, lettings relief in its current limited form, and nominations where there are two residences). HS283 (2026) confirms that a nomination of which residence is the main one must be made within two years of a particular combination of residences.

Exam trap: planning permission and building regulations are separate. SDLT and LTT are different taxes with different nil bands and different filing clocks. Exempt VAT and zero-rated VAT look the same on the invoice (no VAT charged) but only zero-rating recovers input tax. PRR is about the only or main residence, not every buy-to-let the client happens to own.