Who is the purchaser for the purposes of the 3% surcharge where there is occupation under a trust?
3% Additional Rate, Bare Trust, Settlements
“I am acting for a client who is buying her council house, her daughter and son in law (who have separate representation) are funding the entire purchase, disbursements and my costs. They will not proceed by way of a legal charge but are pressing for a declaration of trust, with my client having a right to occupy the property during her lifetime (so it will not be a bare trust). My concern is that as daughter and son in law both own existing properties and are acquiring a beneficial interest in this property equal to all of the equity stamp duty will be payable at the additional rate. The son in law claims he has taken advice from his financial advisor who has told him the extra stamp duty will not be payable. Which of us is right?”
Source: BLG Member
Where the trustees of a settlement acquire a major interest in a dwelling and under the terms of the settlement a beneficiary is entitled to occupy the dwelling for life (or to income earned in respect of the dwelling) the beneficiary is treated as the purchaser for the purposes of the 3% surcharge. So, in this case, the mother will be the purchaser and the daughter and son-in-law’s situation will not be relevant. The 3% additional rate will not apply unless the mother has a major interest in another dwelling so the financial adviser is right.
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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