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Higher Rate Stamp Duty Land Tax: How being a married couple or non-married couple can affect your tax liability.

Posted on 12 April 2017 by Laura Trott

Higher Rate Stamp Duty Land Tax: How being a married couple or non-married couple can affect your tax liability.

Stamp Duty Land Tax (SDLT) is paid when you buy a residential property, e.g. a house or flat, on increasing portions of the purchase price above £125,000. From 1 April 2016, individuals (and companies) have to pay higher rates of SDLT when they buy an additional residential property in England, Wales or Northern Ireland.

The higher rates apply to most purchases by an individual of an additional residential property where, at the end of the day of completion, they own two or more residential properties and are not replacing their main residence. In the case of joint purchasers, the higher rates will not apply where, at the end of the day of completion, each purchaser only owns one residential property.

However, the Higher Rate SDLT liability for joint purchasers can in some examples differ depending on whether the joint purchasers are married and their circumstances of property ownership, for example:

Example A

• Mr and Mrs A are a married couple and each own a residential property, with neither having any interest in the other’s property.
• They both live in the property owned by Mrs A.
• The property owned by Mr A is rented out.
• Mrs A is selling her property and Mr and Mrs A are jointly purchasing a new one, which will be their new main residence.
• Mr A will retain his rented out property.

The higher rates WILL NOT apply in Example A as Mr and Mrs A are married and, since they have both lived in the property owned by Mrs A as their main residence, they will both be treated as replacing their main residence.

Example B

• Mr B and Ms C are not married to one another and each own a residential property, with neither having any interest in the other’s property.
• They both live in the property owned by Ms C.
• The property owned by Mr B is rented out.
• Ms C is selling her property and they are jointly purchasing a new one, which will be their new main residence.
• Mr B will retain his rented out property.

The higher rates WILL apply in Example B since the joint purchasers are not married (or in a civil partnership). Mr B will not be treated as replacing his main residence as, even though he has been living in the property owned by Ms C, he has no interest in the property Ms C is selling.

As you can see from above the situation regarding the Higher Rate SDLT liability for joint purchasers can be complex.

If you have any queries therefore regarding your SDLT liability for a purchase or if you require a quote for a purchase then please contact one of our residential conveyancers to discuss.
 

Posted in: Buying & Selling Your Home