Stamp Duty Land Tax UPDATE

We have seen many articles in the news lately concerning the complexity of the rules around the stamp duty surcharge which is causing buyers to pay too much tax or even abandon purchases in the mistaken belief that they will have to pay the higher rate.

On 24 March 2017, HMRC published updated guidance to explain in more detail how the supplemental 3% charge on additional residential property applies to purchases by companies, partnerships and trusts, and how the charge applies to inherited properties.

There are many cases at the moment where applications are being made for refunds. Equally, there are situations arising where people are being informed that they should have paid the extra charge and so are now potentially liable to penalties and interest.

On 24 March 2017, HMRC published updated guidance to explain in more detail how the supplemental 3% charge on additional residential property applies to purchases by companies, partnerships and trusts, and how the charge applies to inherited properties.

There are a few scenarios in which the supplemental charge will apply (subject to certain conditions) which are not yet widely known. For example the supplemental charge will still apply if:-

  • You do not own any other property in England, Wales or Northern Ireland but instead own other residential property in another country and then buy your first residential property in England, Wales or Northern Ireland.
  • A company is buying a residential property for the first time even though they don't own any other property.
  • A husband or wife buys a residential property in their sole name and they do not personally own any other property but their spouse does.
  • If you already own a property and then purchase another property for your child and both your names are on the title deeds
  • You don't own a residential property but buy at least 2 residential properties at the same time
  • You will not be the legal owner of the property but are the beneficiary of a trust or receive all the income from it and the proceeds from its sale, as the beneficiary is treated as being the purchaser for SDLT purposes. This may also apply if you occupy the property for life.
  • If the property is purchased by a trust and the beneficiary is under 18, the child's parents are treated as the beneficiary.

Solicitors have to ask buyers outright if they already own another property. It would be fraudulent to not answer truthfully and potential penalties could be a lot worse than paying the cost of the 3% surcharge.

Whether you are looking to transfer a property or purchase a property I would be happy to help you with your stamp duty concerns. For further information please contact Christina Antonas at [email protected].