What are the consequences for the 3% additional rate of retaining an interest in a dwelling as a result of a property adjustment on divorce?

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I have a client who is divorced but has to remain on his previous matrimonial property as per the sealed consent order. The order was made pursuant to section 24 (1) (b) of the Matrimonial Causes Act and it is an order for the settlement of the property. He is now purchasing another property and I think under the rules he does not have to pay the higher rate but please confirm.

 

 

You are correct – new paragraph 9B Schedule 4ZA FA 2003 provides that a purchaser’s interest in the former matrimonial home can be ignored for the purposes of the 3% surcharge where:

1. It is an interest in a dwelling which is an ex-spouses only or main residence but not the purchaser’s; and

2. There has been a property adjustment order in respect of that interest for the benefit of the ex-spouse – this includes an order under section 24(1)(b) MCA 1973.

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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