TQOTW: SDLT - Additional Interest Acquired in Main Residence
An unmarried couple are separating after many years together, as part of the separation my client has agreed to buy her partner’s joint interest in the family home for £300,000. Will Stamp Duty Land Tax be payable on this acquisition, and if so, as she also owns a rental property, will the additional 3% rates apply?

A. Finance Act 2003, Schedule 3, Paragraph 3A provides an exemption from SDLT on transactions made in connection with the ending of a marriage or civil partnership. As the couple never married, this exemption will not apply and SDLT will be due on the £300,000 consideration paid by your client to acquire the joint interest from her ex-partner.

Legislation at Schedule 4ZA of Finance Act 2003 contains provisions for SDLT rates to be increased by 3% for the acquisition of additional dwellings. Generally, these rules apply to a transaction if the purchaser has an interest in more than one dwelling unless the property acquired is replacing a main residence that has been, or will be, disposed of in the period 3 years before and 3 years after the acquisition. In this instance, your client does own more than one residential property, but she has not disposed of her main residence, and so it would appear that the 3% additional rate would apply.

However, Finance Act 2018 brought in some minor amendments to provide relief to higher rates of SDLT in certain circumstances. One of these covers the situation where a purchaser adds to their interest in their current main residence.

As such, with the exception of a leasehold interest with less than 21 years to run or a joint interest of less than 25%, transactions after 22 November 2017 will not fall within the higher rate rules if:

  • The purchaser had a prior interest in the purchased dwelling immediately before the date of the transaction, and
  • The purchased dwelling had been the purchaser’s only or main residence throughout the period of three years ending with the date of the transaction.

Therefore, provided the property in question has been your clients only or main residence throughout the last three years, although SDLT will be payable, the additional 3% higher rate will not apply.

Ref:

Higher rates for additional dwellings – FA 03, Sch 4ZA

Paragraph 7A inserted in FA 03, Sch 4ZA by FA 18 with effect in relation to any land transaction of which the effective date is, or is after, 22 November 2017.

HMRC guidance – SDLTM09814


If you have a tax query, why not contact the Tax Advice Line on 0844 892 2470 to discuss it. Our team of experts have a wealth of experience and can also provide a written consultancy service at £180 per hour plus VAT.

Back to Community

Tax Adviser
0844 892 2470


Previously Laura has worked in the tax departments of accountancy practices, advising individuals and owner managed companies. She has experience in most aspects of tax, specialising in income tax, capital gains tax and corporation tax. Laura is a member of the Association of Taxation Technicians and the Chartered Institute of Taxation.

My VIP Tax Team question of the week: UK tax implications of moving to Dubai
My VIP Tax Team question of the week: Sale of shares to personal company transactions securities repercussions
My VIP Tax Team question of the week: Changes to Statutory Paternity Leave