Separating and property issues

Muttleythefrog

Scenario:

Married couple separating. 
They own their own leasehold property (Property 1) of value circa £140k as joint tenants and live together.
Intend to live apart.
Wife plans to buy another leasehold property (Property 2) of approximate price £140k when resources allow and immediately move to it.

Queries:

I'm struggling to understand any issues of Stamp Duty, Capital Gains Tax and legal issues associated such as informal separation agreements, legal separation agreement etc.

As the wife will own a 2nd property they will pay Stamp Duty of 3% on the £140k? Could they avoid this by, at the time of purchasing or prior, transferring their equity of Property 1 to the husband who will remain living there or can separation status achieve such?

What are the CGT issues in play and if any can they be evaded with separation status or with the taking up of immediate residence there. 

Kind regards in advance for advice... or guidance.

silvercar

I’ll move this to the tax board, as this is primarily concerned with the tax implications.

Jeremy535897

Have a look at:
https://www.gov.uk/government/publications/husband-and-wife-civil-partners-divorce-dissolution-and-separation-hs281-self-assessment-helpsheet/hs281-capital-gains-tax-civil-partners-and-spouses-2024
If the current leasehold has always been their main residence throughout ownership, capital gains tax is unlikely to be an issue.
She will have to pay the higher rate of stamp duty based on the number of properties a married couple has an interest in, unless they are permanently separated at the date of purchase:
https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property

Albermarle

Similar thread from yesterday could be of interest.

Divorce, Stamp duty and house buying — MoneySavingExpert Forum

Bookworm105

as you can see in the links above it is more straightforward if there is legal documentation in place "evidencing" that separation has occurred.
However, as you can read, the third bullet point does allow CGT exemption "in such circumstances that the separation is likely to be permanent". What I have not seen on govt guidance websites is examples of what that means in practice.

Unfortunately SDLT is more harsh as it requires that an actual court order is obtained before you can remove exposure to additional rate SDLT 
SDLTM09797 - SDLT - higher rates for additional dwellings: Condition C - divorce and civil partnership dissolution - HMRC internal manual - GOV.UK (www.gov.uk)

Muttleythefrog

Bookworm105 said:

as you can see in the links above it is more straightforward if there is legal documentation in place "evidencing" that separation has occurred.

Yes I'm certainly picking that up. I note it takes many months though to get a legal separation. Thanks for the advice... and to the others too.

Jeremy535897

"Consequently, the date of separation is key. HM Revenue & Customs (HMRC) accepts that a couple is separated if the parties are no longer living in the same house and there is either a court order or deed of separation. An informal agreement can also be acceptable and the date of separation would normally be when one of the parties leaves the home."
https://communities.lawsociety.org.uk/september-2021/a-taxing-split/6001985.article

Muttleythefrog

Jeremy535897 said:

"Consequently, the date of separation is key. HM Revenue & Customs (HMRC) accepts that a couple is separated if the parties are no longer living in the same house and there is either a court order or deed of separation. An informal agreement can also be acceptable and the date of separation would normally be when one of the parties leaves the home."
https://communities.lawsociety.org.uk/september-2021/a-taxing-split/6001985.article

Do you think I'm right to interpret that 'no longer living in the same house' applies for a purchase transaction if that transaction results in one party moving out to live there on same day from the jointly occupied property.