Minimising stamp duty for married couple

tallac

My parents jointly own their own property (no mortgage) and wish to purchase a 2nd property as an additional property (cash purchase, no mortgage). They want to keep the old property for renting out. The stamp duty for the 2nd house is very high as it's an additional property.

Is it possible for the old house to be transferred to one parent and the 2nd house be purchased by the other. This would then considerably reduce the stamp duty as it wouldn't be an additional property. Is this possible? Thoughts?

SpiderLegs

That would probably be the most obvious method of tax avoidance ever if it was possible.

HMRC however do have some level of intelligence so no, it isn’t possible.

sheramber

A married couple are  treated  as one entity for the stamp duty so it would not help.

tallac

Ah okay, wasn't looking to do tax avoidance. Just didn't want my parents to miss out on what might have been a simple tax reduction trick.

MaryNB

tallac said:

Ah okay, wasn't looking to do tax avoidance. Just didn't want my parents to miss out on what might have been a simple tax reduction trick.

That's pretty much what tax avoidance is. Tax avoidance is legal, tax evasion is illegal. Your parents' attempt at avoidance doesn't work though. 

[Deleted User]

tallac said:

The stamp duty for the 2nd house is very high as it's an additional property.

Yep, thats kinda the point. Its to discourage people buying up all the houses as 2nd, 3rd, 4th homes etc and leaving no houses for the people who actually want to buy one to live in. 

You only need one house. 

tallac

Regardless of the correct terminology, what I meant was, I wasn't trying to do anything illegal.

For pretty much my entire life, I've used avoidance and and evasion interchangeably. If I'm playing dodge ball, then:
"I want to avoid the ball" is the same for me as "I want to evade the ball".

Oh well, question answered. Thank you again.

AdrianC

tallac said:

For pretty much my entire life, I've used avoidance and and evasion interchangeably.

But, when it comes to tax, they have very different meanings.

If you didn't drink a bottle of whisky and smoke 40 Marlboro last night because they're too expensive due to the tax on them, that's avoiding tax - as is putting your savings in an ISA, or buying one car instead of another because the road tax is cheaper, or buying an offshore company that owns a £6.5m house instead of buying the house from the company...

If you lie about your savings your tax return so as to avoid paying the tax that's due, or drive your car without taxing it, or buy illegally imported booze and fags from a bloke in a carpark that's evasion.

MaryNB

tallac said:

Regardless of the correct terminology, what I meant was, I wasn't trying to do anything illegal.

For pretty much my entire life, I've used avoidance and and evasion interchangeably. If I'm playing dodge ball, then:
"I want to avoid the ball" is the same for me as "I want to evade the ball".

Oh well, question answered. Thank you again.

They have similar meanings but can have different connotations and are used in different contexts.
You would avoid a traffic jam if trying to get somewhere. You would evade police if you were wanted for committing a crime. 
Evasion is often used in relation to a more negative and/or deliberate action. To avoid tax is trying to find a legal loophole to avoid paying, to evade is trying to do so illegally and hide the action from HMRC.

allconnected

Tallac, the specific reason why it doesn't work is that one of the tests for whether the stamp duty on additional property applies is  whether the purchaser OR THEIR SPOUSE  owns other residential property. This is there to prevent exactly what you propose, couples splitting ownership of multiple properties to own one each.

And Spiderlegs - while HMRC's level of intelligence may be open to debate, they don't draft the legislation, they only implement it. Parliament commissions and approves the legislation, so preventing couples from splitting ownership in this way is down to them!

michael1234

Deleted_User said:

tallac said:

The stamp duty for the 2nd house is very high as it's an additional property.

Yep, thats kinda the point. Its to discourage people buying up all the houses as 2nd, 3rd, 4th homes etc and leaving no houses for the people who actually want to buy one to live in. 

You only need one house. 

Or to encourage divorce.