Stamp duty confusion

mrwallace

My partner and I are buying a new-build home. We are confused regarding how much stamp duty we need to pay. I am a first time buyer, but my partner has inherited parts (roughly 20 percent each) of three properties in her native Bulgaria.

Looking at the government guidance on "Stamp Duty Land Tax: Relief for first time buyers" [1], it seems we, together, do not qualify as first time buyers, as Chapter 3 states:

In order to count as a first time buyer, a purchaser must not, either alone or with others, have previously acquired a major interest in a dwelling or an equivalent interest in land situated anywhere in the world.

I haven't found a satisfactory definition of "major interest", but I presume "major interest" covers my partner's situation, and so the first time buyers exemption does not apply to us. Please advise if this is not the case!

Now the question of whether we need to pay the higher rate stamp duty. The government guidance [2] on higher rate stamp duty says the following:

When you know who the rules apply to, you should work out how many residential properties each of you will own at the end of the day of your new purchase.

If any of you will own, or part own more than one residential property worth £40,000 or more, you will have to pay the higher rates on your new purchase (unless there is another reason why the higher rates do not apply).

Firstly, does this £40,000 threshold apply to the combined value of the three inherited property shares, or does it apply individually to each property share?

Secondly, is this £40,000 threshold applied to the market value of the properties, or the value that is calculated by the local council for the purpose of paying property tax in Bulgaria?

Thanks for any guidance you can offer!

References:
[1] assets.publishing.service.gov.uk/government/uploads/
system/uploads/attachment_data/file/759714/
Stamp_Duty_Land_Tax_relief_for_first_time_buyers_-_guidance_note.pdf
[2] gov.uk/guidance/stamp-duty-land-tax-buying-an-additional
-residential-property#what-property-the-higher-rates-apply-to

davidmcn

Yes, it sounds like she has a major interest.

It'll be the current market value, and she'd need to hit £40k on one property for the exemption not to apply.

00ec25

a "major" interest simply means does she own any part of the freehold (no matter how small) or leasehold (if lease was originally longer than 7 years)
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09780

the 40k is for each property individually, not an aggregate total
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09785

AdrianC

mrwallace wrote: »

Firstly, does this £40,000 threshold apply to the combined value of the three inherited property shares, or does it apply individually to each property share?

Individual. So if she's got a 20% share in each, the value of at least one of the properties would need to be £200k.

Secondly, is this £40,000 threshold applied to the market value of the properties, or the value that is calculated by the local council for the purpose of paying property tax in Bulgaria?

Market value.

mrwallace

Thanks all for the replies and links; we won't have to pay the higher rate! Hurrah! :T