Assuming that the second property is also in England (rules for Scotland and Wales are based on the LBTT and LTT respectively) to determine this we would first need to look at whether there is any consideration for SDLT purposes.
If we assume that the bank will insist that the mortgage is placed into joint names, we will first look under paragraph 8(1)(b) Schedule 4 Finance Act (FA) 2003:
“Where the chargeable consideration for a land transaction consists in whole or in part of–
the assumption of existing debt by the purchaser,
the amount of debt satisfied, released or assumed shall be taken to be the whole or, as the case may be, part of the chargeable consideration for the transaction.”
Based on this, part of the existing debt is consideration and therefore SDLT will need to be considered. The amount, if any, of SDLT due will be based on the amount of debt taken on above the 0% threshold. The rate of SDLT is not based on the value of the property but on the amount of the mortgage (existing debt) commensurate to the property interest being acquired (paragraph 8(1B)).
Currently the 0% rate has been extended to the first £500,000 however from the 1 July 2021 that will reduce to £250,000 and then from 1 October 2021 it will revert to £125,000 as it was pre 7 July 2020.
For example, if the mortgage currently stood at £600,000 and a 50% property interest was acquired by the husband on 30 June 2021 then he would have £Nil to pay on the £300,000 mortgage liability as consideration. If instead he acquired the 50% interest on 1 July 2021 then he would have 5% to pay on £50,000 above the £250,000 0% threshold. If he waited until 1 October 2021, when the 0% band falls to £125,000, there would be a 2% charge on part between £125,000 and £250,000, and 5% on the excess over £250,000.
Where you are looking at SDLT for a second property you need to consider whether the higher rate 3% additional dwellings rate applies. However, as this is a transfer between spouses or civil partners, Paragraph 9A(1) Schedule 4ZA FA 2003 states:
“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
As can be seen from the above a higher rate is not applicable in this situation.
As a reminder SDLT is only charged in the situation above where the spouse or civil partner is taking on an existing debt or any other form of consideration is being paid. If the property were mortgage free, or the share being acquired is below the 0% band, there would be nothing to pay for SDLT purposes if there were no other consideration.
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