Does the SDLT surcharge apply on the acquisition of additional share in existing home?
3% Additional Rate
“I am acting for Miss A and she lives at the property in question. The property was left to Miss A and Mr B (50/50) from their late father over 8 years ago and Miss A has lived at the property since he died. The probate was contested and it has now been agreed that Miss A will buy out her brother’s share for £500k.
Miss A has additional interests in properties elsewhere also.
As consideration is being given for more than £40,000 SDLT will apply here however my question is whether the higher rate will apply here as she is not acquiring an additional interest in one or more dwelling, rather a share in a dwelling that is already her main residence. I would like to infer that it does not apply but any guidance here would be greatly appreciated.”
If Miss 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 to the acquisition of her brother’s share unless she is replacing her only or main residence. This cannot be the case here.
This may be an unintended result and it may be worth a letter to the Stamp Office asking for concessionary treatment.
*** UPDATE – March 2018***
A new paragraph 7A was inserted in Schedule 4ZA by section 40 FA 2018. This takes a transaction out of the surcharge where the purchaser already has a major interest in the purchased dwelling provided that that dwelling has been the purchaser’s only or main residence for the three years ending with the effective date of the acquisition. The change applies from 22 November 2017 (Budget day) so from that date the answer would be different – the acquisition of the additional interest would not be caught by the 3% surcharge.
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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