SDLT Question

marsman802

My solicitor today asked me for circa £54k of stamp duty on the basis we have more than one property however I'm pretty sure we are just paying £30k for the normal rate.

We currently have a BTL in my partners name only and a residential in both our names.
We are selling our residential and purchasing a new residential - nothing is happening with the BTL.

Before transaction:-
Partner - 1 BTL, 1 Residential
Me - 1 Residential

After transaction:-
Partner - 1 BTL, 1 Residential
Me - 1 Residential

Now as I understand it this should not attract any additional SDLT because we are purely replacing our Residential property.

As you can imagine getting an email asking for £24k additional tax out of the blue has somewhat sent us into panic mode however I'm pretty sure I'm right.

Have I interpreted correctly?

kingstreet

I believe so.

There will be no increase in the number of properties owned at completion.

booksurr

point the solicitor to the following:

section 3.1 The higher rates will apply to the purchase of a major interest in a single dwelling by an individual, if at the end of the day of purchase Conditions A to D are met

section 3.2 If ANY of Conditions A to D are NOT met the higher rates will not apply to the purchase.

section 3.42 Where a transaction is entered into by joint purchasers the higher rates will apply if the transaction would be a higher rate transaction for any of the purchasers considered individually. So if there are two individual purchasers and Conditions A to D are all met for one of them only, the transaction will be charged at the higher rates.

section 3.45 This means that where a purchaser is married or in a civil partnership, if Conditions A to D are met by either spouse or civil partner, the transaction will be a higher rates transaction.

So....
 Condition A - the chargeable consideration is £40,000 or more; CONDITION MET - price paid > £40k

 Condition B - the dwelling is not subject to lease which has more than 21 years to run on the date of purchase; CONDITION MET - property is freehold not leasehold

 Condition C - the purchaser owns an interest in another dwelling which has a market value of £40,000 or more and is not subject to a lease which has more than 21 years to run at the date of purchase of the new dwelling; CONDITION MET - spouse has interest in another property

 Condition D - the dwelling being purchased is not replacing the purchaser’s only or main residence. Condition NOT MET - the purchased dwelling IS a replacement of the purchaser’s [STRIKE]only or[/STRIKE] main residence.

The higher rate does not apply since you do not meet condition D therefore, as section 3.2, the higher rates do not apply

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/509184/GuidanceNote_Final.pdf

marsman802

Thank you - bit disappointed she didn't know this. Unnecessary worry for those involved.

tlc678910

Hi,
Just to confirm that you will be selling your residential property at the same time as purchasing? Otherwise you have to pay the extra stamp duty and claim it back if you sell within the time allowed.
Tlc

marsman802

Yes its a sale & purchase instruction all completing on Friday.

I have a feeling this is just a case of not knowing the new rules well. Her email just stated that HMRC apply the higher rate when you own more than one property but clearly we all know that isn't the correct application...wonder what other clients have done this and actually paid it.

AnotherJoe

That is shocking.

Mrs_pbradley936

AnotherJoe wrote: »

That is shocking.

It is but I thought we would have to pay extra stamp duty because we have a house and a flat we inherited.

AnotherJoe

booksurr wrote: »

? has a post been deleted?

No my post was direct response to the text right above mine " have a feeling this is just a case of not knowing the new rules well. Her email just stated that HMRC apply the higher rate when you own more than one property but clearly we all know that isn't the correct application...wonder what other clients have done this and actually paid it.

This is an absolutely basic tenet of the rules that this solicitor has failed to understand, eg that if you are replacing your residential property the tax is not due. It's even in very simple flowchart format. That's what I found shocking, it's their profession they should know this.

kingstreet

Mrs_pbradley936 wrote: »

It is but I thought we would have to pay extra stamp duty because we have a house and a flat we inherited.

It may be a good idea to start your own thread if you want clarification on your situation.

Mrs_pbradley936

kingstreet wrote: »

It may be a good idea to start your own thread if you want clarification on your situation.

I did and I have been given it - I was simply highlighting that many people think they have to pay this increased amount.