Yes, the additional 3% charge will apply here for the reasons outlined below.
In order to determine whether the SDLT higher rates will apply to the spouse purchasing alone, the conditions set out para 3(1) Sch. 4ZA FA 2003 will apply to both spouses, on the assumption that the other spouse was a purchaser, provided both spouses or civil partners are living together at the date of completion(Para 9 Sch. 4ZA FA 2003).
The transaction is to be treated as being subject to SDLT higher rates and para 9 of Sch. 4ZA effectively deems the purchaser’s spouse as party to the transaction provided the following:
- the purchaser (or one of them) is married or in a civil partnership on the effective date,
- the purchaser and the purchaser’s spouse or civil partner are living together on that date, and
- the purchaser’s spouse or civil partner is not a purchaser in relation to the transaction.
Persons who are married to, or are civil partners of each other, are treated as living together for the purposes of Schedule 4ZA, if they are so treated for the purposes of section 1011 of the Income Tax Act 2007 – see SDLTM09820.
Para 9(2) requires the following conditions of Para 3 to be applied to each spouse and if either spouse meets all the conditions A to D, the purchase will be subject to the higher rates of SDLT.
A purchase of a major interest in a single dwelling by an individual will be a “higher rates transaction” and the higher rates of SDLT will apply to the purchase, if at the end of the day of purchase each of conditions A to D:
- Condition A – the chargeable consideration is £40,000 or more
- Condition B – the major interest purchased is not subject to a lease which has more than 21 years to run on the date of purchase
- Condition C – the purchaser owns a major interest (with a market value of £40,000 or more) in another dwelling which is not subject to a lease which has more than 21 years to run at the date of purchase of the new dwelling, and
- Condition D – the dwelling being purchased is not replacing the purchaser’s only or main residence.
In contrast, if the spouse with the property portfolio decided to transfer a residential property to the other spouse, and on the effective date of the transaction the two of them are married to, or civil partners, of each other, and living together, then the transaction is not a SDLT higher rates transaction (Para 9A Sch. 4ZA FA 2003).
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