Stamp Duty - Property bought by a couple, one of which is FTB

Aj_newbie

Hello Everyone!

2022
I own a property.
My spouse doesn't own any property.

2023
We buy a property together. And pay stamp duty, as per 'additional property' rates.

House price 500,000
What we paid as Stamp Duty - 27,500

However, given that only I own a property in addition to the house we bought in 2023, and my spouse is first time buyer for this property, what is the law around this?

In an ideal world (favourable to me), 50% of the house price is considered for 'additional property' rate, where as 50% is considered for 'new buyer' rate.

But if we divide the house price into two, and divide the threshold as well into two - 
Stamp duty for my share - 13,750
Stamp duty for my spouse's share - 1875
Total Stamp Duty : 15,625 

What does the law state?
Many Thanks in Advance,
Aj

user1977

Aj_newbie said:

In an ideal world (favourable to me), 50% of the house price is considered for 'additional property' rate, where as 50% is considered for 'new buyer' rate. I do not find any info regarding this on gov website.

You can't find it because that's not how it works. You've paid the correct rates.

The rules are explained quite clearly here:

https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property

in particular:

If you’re married or in a civil partnership

The rules apply to you both as if you were buying the property together, even if you’re not.

If either of you individually have to pay the higher rates, you must pay the higher rates for the transaction as a whole (unless you’re permanently separated).

MobileSaver

Aj_newbie said:

I own a property.
My spouse doesn't own any property.

What does the law state?

The law states that if either of you own another property then you have to pay the full additional rate.

silvercar

Only way round it would be if you weren’t married and you weren’t going on the deeds of the property ie single proprietor, 2 borrower situation. Sometimes used by parents helping their offspring get a mortgage by going on the mortgage but not the property. Obvious risks to your security in doing this.

MeteredOut

Aj_newbie said:

Hello Everyone!

2022
I own a property.
My spouse doesn't own any property.

2023
We buy a property together. And pay stamp duty, as per 'additional property' rates.

House price 500,000
What we paid as Stamp Duty - 27,500

However, given that only I own a property in addition to the house we bought in 2023, and my spouse is first time buyer for this property, what is the law around this?

In an ideal world (favourable to me), 50% of the house price is considered for 'additional property' rate, where as 50% is considered for 'new buyer' rate.

But if we divide the house price into two, and divide the threshold as well into two - 
Stamp duty for my share - 13,750
Stamp duty for my spouse's share - 1875
Total Stamp Duty : 15,625 

What does the law state?
Many Thanks in Advance,
Aj

Could probably divorce AND have a decent future wedding for that nearly £12K difference.

Joke, of course, but this is just one of those anachronisms that directly impacts peoples finances.

Aj_newbie

Thanks everyone for your inputs. Really appreciate. 

About rental income from the property in my name, whhch my spouse isnt a partner in, I have to pay full tax on the profit, profit cannot be divided.

The law seems unfair to me, with my limited knowledge.

For saving tax, we do not get benefit of being married.
For paying tax, we are ripped off because we are married.

MobileSaver

Aj_newbie said:

For paying tax, we are ripped off because we are married.

If it makes you feel any better you would still have to pay the additional SDLT even if you weren't married - the extra 3% is triggered because one of the two people buying the property already owns a property, regardless of whether they're married or not.

user1977

MobileSaver said:

Aj_newbie said:

For paying tax, we are ripped off because we are married.

If it makes you feel any better you would still have to pay the additional SDLT even if you weren't married - the extra 3% is triggered because one of the two people buying the property already owns a property, regardless of whether they're married or not.

Yes, the only advantage an unmarried couple would have is if they had the properties 100% in their respective sole names without even a beneficial interest in the other property, and not that many can afford to do that (or would want to e.g. live in a property owned solely by their partner).

Plus bear in mind the tax advantages which married couples do have e.g. full relief on Inheritance Tax.

Aj_newbie

Thanks, makes much sense now.
And definitely make me feel better.

Thank you folks. Have a nice weekend.