Chattel

According to HMRC, a chattel is described as ‘…an asset that is tangible and moveable’ (such as furniture), in contrast to a fixture, which is defined as ‘…an asset that is installed or otherwise affixed in or to a building or land so as to become part of that building or land’ (such as a boiler). For instance, a bath may be considered a fixture, while a fridge would typically be categorised as a chattel.

HMRC further explains that ‘…a chattel may become a fixture if it is fixed to a building or land. For example, before being installed in a building as part of a central heating system, a central heating radiator is considered a chattel. Once installed, it becomes a fixture.’

This distinction holds significant importance in property sales or leasehold agreements, as it determines ownership rights.

Two primary tests are utilised to determine whether something is classified as a fixture or a chattel:

1. The degree of physical affixation. Although not definitive, generally, the greater the degree of affixation (i.e., the damage caused by removal), the more likely it is for an object to be classified as a fixture. Conversely, if it can be easily removed, it is more likely to be considered chattel.
2. Intent. If an object is intended to be permanent and to improve the property over time, it is classified as a fixture. However, if any attachment is intended to be temporary and only necessary for the object’s use and enjoyment, it is deemed a chattel.

Nevertheless, these tests are not universally applied in determining the right to remove an object. Leasehold agreements typically differentiate between the landlord’s fixtures and the tenant’s fixtures, which they may remove at the lease’s end (provided they restore any damage). Similarly, conveyancing reports for property sales may specify that certain fixtures are not part of the land being sold.

Disputes may arise, especially concerning valuable items like paintings, which may be regarded to varying degrees as part of the building they are housed in. In cases of doubt, seeking legal advice and documenting the agreement in writing before signing any contract is advisable.

Furthermore, the distinction between fixtures and chattels significantly impacts the calculation of stamp duty land tax. Fixtures are included in the taxable value of the purchase, while chattels are not. Including fixtures may push the sale price for tax purposes into a higher stamp duty threshold, resulting in a larger tax liability for the buyer than anticipated.

According to HMRC:

• Chattels typically include items like carpets, curtains, free-standing furniture, kitchen appliances, and light fittings (unless recessed).
• Items not usually considered chattels include fitted kitchen units, bathroom fixtures, central heating systems, and intruder alarm systems.
• Plants, shrubs, or trees growing in the soil that forms part of the land are not regarded as chattels, although deductions may be appropriate for plants growing in pots or containers.