How does the SDLT surcharge apply on a purchase by a married couple?

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“Kevin has just remarried having divorced about three years ago, but his former matrimonial home remains unsold and in joint names. He and his new wife Heather are looking to buy a property together, either in joint names or just hers. Heather will be selling the residence in Greenwich in which they both live but which is in her sole name. To complicate matters further she has a holiday home in Ramsgate.

I have said to Kevin that my understanding of the SDLT position is that whether they buy in joint names or just Heather’s (assuming contemporaneous sale of their main residence in Greenwich) they will still have to pay SDLT at the higher rate because of Kevin’s retained interest in his former matrimonial home, but should be able to reclaim the extra if that is sold within three years.”

Source: BLG Member 


You are correct.  Where one party to a marriage (or a civil partnership) is a sole purchaser and the parties are ‘living together’ (applying the test in section 1011 ITA 2007) on the effective date of the purchase of a dwelling (normally completion) the tests for the 3% surcharge are applied to both parties individually even though one is not a purchaser and even where that person has no interest in the property. If one member of the couple is caught the surcharge applies.

If the new property becomes a replacement for Kevin’s only or main residence within three years of completion of the purchase the additional 3% can be claimed back.

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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