How does the 3% SDLT surcharge apply where a dwelling is purchased by one member of a married couple?
3% Additional Rate, Couples
“I have a client who is purchasing in her sole name, with mortgage. Her husband is to be an adult occupier of the property. He will not have any legal interest in the property but he does own a property with his ex-wife. It looks like that has been his principal residence but he is now moving out of that property and moving into the new property, albeit not having any official legal interest. I am aware from a recent lecture that technically because he will have an equitable interest in the property there may be a technical argument that higher rate SDLT is payable or am I overthinking this?”
Source: BLG Member
Where one party to a marriage (or a civil partnership) is the 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. This is the case even where one is not a purchaser and has no interest in the property. If one is caught the surcharge applies to the whole transaction.
I do not have sufficient information to decide whether this transaction will be caught or whether the replacement of the only or main residence ‘get-out’ will apply.
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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