A: There are multiple points here to look at. I will address each of them separately.
Consideration
When transferring a share of a residential property as a gift, we focus primarily on the consideration within the meaning of FA 2003 Sch. 4 with HMRC’s guidance at SDLTM03600. Your client’s debt in terms of the mortgage would be chargeable consideration if it presumably going to be transferred into joint names with his wife. Therefore, we would be looking at £150k and £150k for each outstanding mortgage.
The residential rates would then be used, considering the bands. When applying the pre-April 2025 rates, it would be assumed no SDLT would be payable due to the first band of up to £250,000 at zero percent. However, we would have to then look at linked transactions and how this applies to the clients.
Higher rate stamp duty land tax
To address this, it is crucial to understand that legislation differs when there is a transfer between spouses/civil partners. This can be seen within para 9A Sch. 4ZA FA 2003:
9A(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)).
This legislation is discussed by HMRC in SDLTM09820.
This means that where there is a transfer of interests between spouses or civil partners who are living together, they do not have to pay the higher rate of SDLT.
Linked transactions
The meaning of linked transactions can be found within FA 2003 S108. Here it defines in what circumstances we may be looking at purchases of multiple properties and thus must link them when paying SDLT.
108(1) Transactions are “linked” for the purposes of this Part of this Act if they form part of a single scheme, arrangement or series of transactions between the same vendor and purchaser or, in either case, persons connected with them.
By taking a look at Stamp Duty Land Tax: linked purchases or transfers – GOV.UK we can see how HMRC apply this legislation and compare your client’s scenario.
Firstly, it would be a case of establishing if the transfer of the houses is within the same transaction and therefore part of the same scheme or arrangement. As the husband is transferring both the properties over to the wife with the same interest, it is possible this would be seen as linked.
In the case this does not apply, as it may be that there is no scheme or arrangement in place, we would then be looking at transactions linked as part of a series of transactions. This is where a sale is followed by one or more related sales and there is something to link these all together.
It is important to note that there is no limit to the length of time between the transactions, whilst this is vague, it does give the impression that if the other conditions are met, there will still be a linked transaction even after a substantial period.
HMRC’s guidance at SDLTM30100 gives a further application of how they regard a ‘series of transactions’. Here it stipulates that there must be something else beyond one transaction following another to be a series of transactions. This would then be a question of fact if they are related. Applying this, it would have to be established why the husband is wanting to transfer the property over to the wife.
On the basis that your clients meet these conditions, they would be looking at a linked transaction. Therefore, the SDLT thresholds would be applied to the total consideration for both of the transfers, rather than each transfer individually. This would result in SDLT becoming payable.
