Stamp duty following separation

finance_dud_guy

I have seen similar threads but none quite the same so apologies for any repetition.

My wife and I are separating and selling our joint house, splitting the proceeds then will buy two separate homes (one each in our own names, not joint). We are not intending to divorce at this stage ("amicable" separation). Question is whether one of the new purchases will attract the higher stamp duty? If so, is there anything we can do to quickly make the separation more formal from a tax perspective (preferably avoiding too much expense/time)?

Thanks all

newsgroupmonkey_

Some advice as a divorcee.

Separations are often amicable. Divorces often aren't.
Once you get lawyers involved and they start telling you and your ex what you are and aren't entitled to, things get messy.

In terms of the original question, if you are buying a house and your wife is buying a house, then there is no additional SDLT required.
https://www.mercianaccountants.co.uk/stamp-duty-divorce/#Marriage_vs_Separation_The_3_SDLT_Surcharge

finance_dud_guy

Thanks @newsgroupmonkey_ . That is useful and reflects what I thought. I guess the question may arise as to how to define "agree to separate permanently" and what the HMRC would take as proof (I'd be surprised if just telling them would suffice). I know there is an application (costs £385??) to get separation recognised by the government but not sure if this is worth it or what the implications are. Some more digging required methinks. Cheers

Bookworm105

in essence, permanent separation would be judged on "the matter of facts" in the absence of formal documentation
- are you next door neighbours or opposite ends of the country!
- how often are you seen (by neighbours) to visit (incl overnight!!!!!)

Whether your case would ever reach the stage of an "on the ground" investigation is of course somewhat unlikely in these times of limited people resources.

finance_dud_guy

Great - thanks - that is comforting. I think we should be OK to plough on and pay two lower rate stamp duties based on this and comments from our conveyancing solicitor 

AskAsk

I called HMRC stamp duty helpline about my divorce and they said it would need to be formal before we are exempt.  That we would need to pay the extra stamp duty and then claim it back when the divorce is complete.

There are so many articles from solicitors on the net about tax on divorce that it isn't clear to me and I am not sure how much help you can get from the helpline either!

If I were in your position, I would consult a tax lawyer, who will be able to give you the definitive answer.

SDLT_Geek

AskAsk said:

I called HMRC stamp duty helpline about my divorce and they said it would need to be formal before we are exempt.  That we would need to pay the extra stamp duty and then claim it back when the divorce is complete.

There are so many articles from solicitors on the net about tax on divorce that it isn't clear to me and I am not sure how much help you can get from the helpline either!

If I were in your position, I would consult a tax lawyer, who will be able to give you the definitive answer.

It seems to me the HMRC helpline have got it hopelessly wrong here!  That is not uncommon.

AskAsk

SDLT_Geek said:

AskAsk said:

I called HMRC stamp duty helpline about my divorce and they said it would need to be formal before we are exempt.  That we would need to pay the extra stamp duty and then claim it back when the divorce is complete.

There are so many articles from solicitors on the net about tax on divorce that it isn't clear to me and I am not sure how much help you can get from the helpline either!

If I were in your position, I would consult a tax lawyer, who will be able to give you the definitive answer.

It seems to me the HMRC helpline have got it hopelessly wrong here!  That is not uncommon.

going through the divorce process at the moment and we are in the 20 weeks waiting period.  the problem is that until the divorce is final, you can change your mind at any time and abandon the divorce process, so I think this is why HMRC wants to see proof that we have actually got the divorce before you can avoid the extra stamp duty as otherwise people may pretend to be starting the process and actually never go through with it, to avoid the tax.

or they actually do abandon the process for one reason or another and HMRC wouldn't want to keep an eye on what is happening with someone's divorce to demand the extra stamp duty.  the tax man asks for the tax first and it is up to you to claim it back when you have proof that we are no longer a couple.

Bookworm105

AskAsk said:

SDLT_Geek said:

AskAsk said:

I called HMRC stamp duty helpline about my divorce and they said it would need to be formal before we are exempt.  That we would need to pay the extra stamp duty and then claim it back when the divorce is complete.

There are so many articles from solicitors on the net about tax on divorce that it isn't clear to me and I am not sure how much help you can get from the helpline either!

If I were in your position, I would consult a tax lawyer, who will be able to give you the definitive answer.

It seems to me the HMRC helpline have got it hopelessly wrong here!  That is not uncommon.

going through the divorce process at the moment and we are in the 20 weeks waiting period.  the problem is that until the divorce is final, you can change your mind at any time and abandon the divorce process, so I think this is why HMRC wants to see proof that we have actually got the divorce before you can avoid the extra stamp duty as otherwise people may pretend to be starting the process and actually never go through with it, to avoid the tax.

or they actually do abandon the process for one reason or another and HMRC wouldn't want to keep an eye on what is happening with someone's divorce to demand the extra stamp duty.  the tax man asks for the tax first and it is up to you to claim it back when you have proof that we are no longer a couple.

you are overlooking the fact that HMRC phone answerers are first and foremost call centre staff.
They are not technical experts and only "know" what it tells them on their screen in the few seconds they have to read it before having to reply to a caller.

It is a given that their answers are superficial and slanted to HMRC, not the letter of the tax law 

SDLT_Geek

Bookworm105 said:

AskAsk said:

SDLT_Geek said:

AskAsk said:

I called HMRC stamp duty helpline about my divorce and they said it would need to be formal before we are exempt.  That we would need to pay the extra stamp duty and then claim it back when the divorce is complete.

There are so many articles from solicitors on the net about tax on divorce that it isn't clear to me and I am not sure how much help you can get from the helpline either!

If I were in your position, I would consult a tax lawyer, who will be able to give you the definitive answer.

It seems to me the HMRC helpline have got it hopelessly wrong here!  That is not uncommon.

going through the divorce process at the moment and we are in the 20 weeks waiting period.  the problem is that until the divorce is final, you can change your mind at any time and abandon the divorce process, so I think this is why HMRC wants to see proof that we have actually got the divorce before you can avoid the extra stamp duty as otherwise people may pretend to be starting the process and actually never go through with it, to avoid the tax.

or they actually do abandon the process for one reason or another and HMRC wouldn't want to keep an eye on what is happening with someone's divorce to demand the extra stamp duty.  the tax man asks for the tax first and it is up to you to claim it back when you have proof that we are no longer a couple.

you are overlooking the fact that HMRC phone answerers are first and foremost call centre staff.
They are not technical experts and only "know" what it tells them on their screen in the few seconds they have to read it before having to reply to a caller.

It is a given that their answers are superficial and slanted to HMRC, not the letter of the tax law 

I agree the HMRC helpline staff are not technical experts. Sometimes their answers are slanted to HMRC, other times they give people false hope. 

Other people call multiple times and get a different answer on each occasion.  It is very frustrating!

pjs493

You can legally separate without divorcing if that's something you might consider doing. Usually it's something that is only done by people for religious reasons or if they otherwise find divorce objectionable. A legal separation can be applied for through family court and once done means things like finances, etc are considered completely separate.

https://www.gov.uk/legal-separation