Does the 3% SDLT Surcharge Apply to the Purchase of a Freehold Reversion?
3% Additional Rate
“I have three flat owners who are purchasing the freehold for £41,000. Will the higher rate of land tax be payable? They are purchasing in their individual names and then transferring it to a company. Will the stamp duty land tax have to be paid twice?”
Source: BLG Member
The 3% surcharge does not apply (whoever is the purchaser) where the interest purchased is subject to a lease which has more than 21 years to run. This is because Condition B in paragraph 3(3) Schedule 4ZA FA 2003 is not met.
Neither the purchase by the three flat owners nor the transfer on to the company will be chargeable to SDLT as the chargeable consideration of £40,000 which I assume is the market value is below the £125,000 threshold for residential property.
At the time of publication this response was correct however as tax legislation and practice change from time-to-time you should take specific advice before taking any action.
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