Relief from higher rate SDLT for spouse transfers – true or false?

by Readers Question

10:24 AM, 21st August 2018
About 4 months ago

Relief from higher rate SDLT for spouse transfers – true or false?

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Relief from higher rate SDLT for spouse transfers – true or false?

I would like to transfer my 50% interest in a mortgaged BTL to my spouse who already owns the other 50% as tenant in common. We also own the family home.

No CGT on transfer between spouses – so that is not an issue

Transfer would be by declaration of trust without changing the Land Registry entries.

I read in the Finance Act 2018, Schedule 11, Para 9A that:

“(1) A chargeable transaction is not a higher rates transaction for the purposes of paragraph 1 if—

(a) there is only one purchaser,
(b) there is only one vendor, and
(c) on the effective date of the transaction the two of them are—
(i) married to, or civil partners of, each other, and
(ii) living together (see paragraph 9(3)).”

We satisfy these conditions. However I see no mention of this on property/legal websites subsequent to the initial announcement of the provision and the HMRC SDLT calculator does apply this provision.

My first question – is my understanding correct that I can make this transfrer at the standard SDLT rates (applied to my share of the mortgage on the property) and do not have to pay the higher rate?

I also read on the HMRC website:

“If the larger share is given outright as a gift

If you take a bigger share but don’t pay anything in return, there’s no ‘consideration’ given including taking on liability for a mortgage. You won’t pay SDLT, even if the value of the extra part of the share is more than the SDLT threshold. You don’t need to tell HMRC about the transaction.”

Second question – does SDLT apply to the transfer if it is for a transfer to an existing part owner, regardless any mortgage or any spouse participation? I have not found the legal basis for this statement by HMRC.

Andrew



Comments

Neil Patterson

10:27 AM, 21st August 2018
About 4 months ago

Hi Andrew,

Mark is away on holiday, but I did ask him to briefly answer your question:

"There would be no transfer of mortgage liability and hence no consideration and no Stamp Duty in this instance, because the mortgage liability is already joint and several.

Severance of tenancy will, however be necessary, as will Form 17."

funkyegg

17:02 PM, 28th August 2018
About 4 months ago

Hello,

My wife and I are in a very similar situation here. We jointly own a BTL property as Tenants in Common with 50:50 split and the property has an outstanding mortgage of £280k. We also jointly own our current home as Joint Tenancy. I’m higher income tax rate payer and my wife is on basic rate and I’m planning to transfer majority of my share of beneficial interest on the BTL property to my wife.

It is my understanding that I could achieve this using a Deed of Trust but I am not 100% sure if this would attract any stamp duty or other charges. If no SDLT or other charges are applicable, then please can someone refer me to an experienced professional who can help me to prepare the DoT?

Thanks,
Neal

Neil Patterson

18:40 PM, 28th August 2018
About 4 months ago

Response from Mark Alexander on holiday:

In these specific circumstances there would be no SDLT due because there would be no consideration. This is because the equity would be gifted and the mortgage liability is already joint and several. You would need to sever the joint tenancy to become tenants in common, have a professionally drafted Declaration of Trust and file Form 17 with HMRC. Our recommended barrister charges £250 + VAT per property to deal with all of the transactions listed above. Would you like us to make an introduction?


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