Stamp Duty Land Tax
‘The best cure for insomnia is to get a lot of sleep’ (W. C. Fields)
I have been an insomniac for a while now. A few of you have been kind enough to suggest remedies, such as reading HMRC’s 81-page summary of responses to the Making Tax Digital consultation and listening to whale music. Sadly, these failed even when done simultaneously, as did Bach’s Rescue Remedy, Sleepy Cow Calming Pillow Mist Spray, camomile tea, writing the reasons why I can’t sleep in my ‘I can’t sleep journal’ and the imprecations of the Yoga Sleep Bunny. My long-suffering partner (his words, not mine) is looking haggard. Night-time chats and the sound of humpback whales ‘singing’ in the small hours have made him a little tetchy.
I know that Churchill and Maggie got by on less than four hours’ sleep a night (along with, in Churchill’s case, a couple of bottles of Pol Roger). The Donald only needs three hours, of course. My target is eight and I’m falling woefully short.
A couple of the things that may have been stopping me nodding back off are, firstly, the torrent of queries I’ve been getting on the 3% SDLT surcharge and, secondly, how on earth I’m going to get the third edition of my SDLT book finished by the end of April.
HMRC’s view in March 2016 was that ‘lawyers and conveyancers are expected to incur negligible one-off costs due to familiarising themselves with the new structure of SDLT’ which applies from 1 April 2016. Well, that’s certainly not how it seems to be panning-out. I am inundated with desperate pleas for help from far and wide. Well from St Leonards to Cardiff, I must stop exaggerating – it’s the sleep-deprivation.
The SDLT surcharge legislation (now in Schedule 4ZA FA 2003) seems to me to have a few what may be described as unexpected results. Here are just three examples:
A and B, an unmarried couple, owned their home as tenants in common in equal shares. B died without leaving her share in the property to A. B’s estate agrees to sell B’s share in the dwelling to A for £65,000.
If A does not have a major interest in another dwelling the 3% surcharge will not apply to this transaction. If A has a major interest worth £40,000 or more in another dwelling and that interest is not subject to a lease with an unexpired term of more than 21 years, the 3% surcharge will apply in spite of the fact that A is acquiring an additional interest in his existing home.
A and B, who already own other dwellings, wish to help their child, C, with the purchase of C’s only property and first home. A and B provide 30% of the purchase price. C purchases the property and enters into a declaration of trust, setting out the beneficial ownership of the property, showing that A and B have a 30% interest in the property and C, the balance. C is the only legal owner.
If the transaction is structured in this way the 3% surcharge will apply to the acquisition. If A and B lent the money to C and took a security interest over C’s property there would be no SDLT charge on them and C’s acquisition would not be subject to the surcharge. This is because the SDLT legislation requires a person to be a ‘purchaser’ before they are chargeable. A ‘purchaser’ is a person acquiring a chargeable interest. A ‘security interest’ is an exempt, not a chargeable, interest and is defined as ‘an interest or right (other than a rentcharge) held for the purpose of securing the payment of money or the performance of any other obligation’.
A married couple are buying their first home for £800,000. They had previously been renting outside the UK. Ten years ago the wife inherited a share of what had been her parents’ farmhouse in France. Her share is now worth £50,000 and because of this the 3% surcharge will apply to the purchase giving additional SDLT of £24,000. If the interest in the farmhouse had been inherited after the purchase, there would have been no surcharge.
No wonder I can’t sleep.
Desperate times call for desperate measures: in this case, the buying of a new bed. My (long-suffering) partner did the research and he came up with Vispring. Next thing I knew we were on the way to their bed-making factory just outside Plymouth.
I have always been fascinated by technical jargon (maybe that’s why I’m a tax lawyer) so I had a great day out talking about nesting springs, teasing, carding and hand-tufting. I also bounced on a few mattresses. Under cross-examination the enigmatic Duncan, factory manager at Vispring, didn’t think Brexit would make a difference to their business and, possibly more importantly, didn’t think I needed more than three layers of springs.
The bed has now arrived (as has another flurry of SDLT queries). I’ll report back on both.
Tax lawyer specialising in business tax, SDLT and VAT