Stamp Duty - extra 3%, do I need to get married?

MarkNes

Guys - I am really struggling with the stamp duty guidelines and would appreciate your help. The situation is:

- I own a buy to let as well as own the house I live in as my main residence
- my girlfriend owns a buy to let and lives with me as her main residence. Prior to this she rented a flat.  Her buy to let was her first home but it’s been rented out for 8 years.
- we have just accepted an offer on our primary residence and had an offer accepted on a new house which we intend to purchase together.

I understood from the government helpline that as this will be our primary residence we would not need to pay the extra 3%, but having just read the governments guidelines myself I am worried that because we are not married my girlfriendS B2L might be seen as her primary residence and as such we will need to pay the extra 3% on the new joint purchase.  Reading between the lines if this is the case, the only way around it would be for us to get married / civil partnership which just seems wrong!!
If however this is the case how soon before completion would we need to be married / civil partnership?
Can anyone help?

[Deleted User]

MarkNes said:

Guys - I am really struggling with the stamp duty guidelines and would appreciate your help. The situation is:

- I own a buy to let as well as own the house I live in as my main residence
- my girlfriend owns a buy to let and lives with me as her main residence. Prior to this she rented a flat.  Her buy to let was her first home but it’s been rented out for 8 years.
- we have just accepted an offer on our primary residence and had an offer accepted on a new house which we intend to purchase together.

I understood from the government helpline that as this will be our primary residence we would not need to pay the extra 3%, but having just read the governments guidelines myself I am worried that because we are not married my girlfriendS B2L might be seen as her primary residence and as such we will need to pay the extra 3% on the new joint purchase.  Reading between the lines if this is the case, the only way around it would be for us to get married / civil partnership which just seems wrong!!
If however this is the case how soon before completion would we need to be married / civil partnership?
Can anyone help?

The HMRC guidelines are clear. You will be replacing your main residence but your girlfriend won't be she will be purchasing an additional residential property and therefore the higher rate of SDLT for the purchase of additional residential properties will apply. 

As far as I know there isn't a hard and fast rule about the timing of your marriage for HMRC to not consider it a contrived attempt at tax avoidance. I'd say that as you've already accepted an offer on your property and put an offer in on the property you want to jointly purchase you're probably a bit late to the party. What is your solicitor advising? 

oldbikebloke

it has been the tenants main home for the last 8 years. Your GF cannot claim it is her home when she no access to it, even it is the only property she owns

your GF has no legal (or beneficial) interest in your property, so the fact she lives there is irrelevant as you are not married, so it cannot be "deemed" to be her home, so she cannot claim she is replacing her home when she buys into the next property. She will going from owning 1 to owning 2 properties. Higher rate SDLT applies  
cut and dried perfect match to example 2
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09810

marriage would give her deemed occupation of your place and thus she would be "replacing" her property as outlined in example 1, so higher rate would not apply 
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09810
BUT that would be subject to LoL's caveats outlined above .


the other obvious ruse would be to make her a legal (co) owner of your property before its sale. Then she would be replacing her home even though not married. Clearly you have left that too late and any transfer to her may trigger taxes anyway depending on the size of any outstanding mortgage on it and her share obtained in it.

Keep_pedalling

There are other  ( non-romantic) reasons why getting married is a good idea. Spousal exemption for IHT for one.

If you decide against it for goodness sake make sure you both have wills drawn up and lasting powers of attorney as well.

davidmcn

Or you could just pay your tax.

MarkNes

It’s not about just paying the tax or not, it’s about clarity on if it’s required. There have been countless examples of people being charged incorrectly as the regulation isn’t clear and different experts give different views.  If it’s required we can’t move, if it’s not we can. The good news is the HMRC have confirmed that in our situation the extra 3% is not required so i am happy i didn’t take my first conveyancers advise.   

[Deleted User]

MarkNes said:

It’s not about just paying the tax or not, it’s about clarity on if it’s required. There have been countless examples of people being charged incorrectly as the regulation isn’t clear and different experts give different views.  If it’s required we can’t move, if it’s not we can. The good news is the HMRC have confirmed that in our situation the extra 3% is not required so i am happy i didn’t take my first conveyancers advise.   

No, some call centre lacky at HMRC has given you incorrect information. In your situation, as it stands now, the higher rate is absolutely due. Fail to pay it and you won't be able to use the duff information from the call centre as a defence. 

sal_III

MarkNes said:

It’s not about just paying the tax or not, it’s about clarity on if it’s required. There have been countless examples of people being charged incorrectly as the regulation isn’t clear and different experts give different views.  If it’s required we can’t move, if it’s not we can. The good news is the HMRC have confirmed that in our situation the extra 3% is not required so i am happy i didn’t take my first conveyancers advise.   

Taking the advice of a call centre operator over a conveyancer, what could go wrong...

I hope you have it in writing at least.

oldbikebloke

MarkNes said:

The good news is the HMRC have confirmed that in our situation the extra 3% is not required so i am happy i didn’t take my first conveyancers advise.   

have you got that in writing on HMRC official paper from a named person at HMRC?
countless examples of HMRC call centre staff not asking the right questions and therefore "advising" based on incomplete facts of the case which are then shown to be wrong.
In what way do you NOT fit the examples I gave earlier? They ARE the official legal position