HMRC SDLT: Higher Stamp Duty Rates for Joint Property Purchasers and Spouses Explained

Higher Rates for Additional Dwellings: Joint Purchasers

When buying property with others, higher Stamp Duty Land Tax (SDLT) rates apply if any purchaser would individually trigger these rates. This also extends to the spouse or civil partner of any purchaser if they meet specific conditions. The rules apply regardless of how the property is owned, whether as joint tenants or tenants in common. If a purchaser has no beneficial interest, they are not considered a joint purchaser, provided this is documented.

• Higher rates apply if any joint purchaser individually qualifies for them.
• The spouse or civil partner of a purchaser can trigger higher rates if certain conditions are met.
• The rules apply to both joint tenants and tenants in common.
• A purchaser with no beneficial interest, documented in writing, is not considered a joint purchaser.
• Beneficial interest includes rights to sale proceeds, income, or property occupation.

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Understanding Higher Rates of SDLT for Joint Purchasers

When two or more people buy a property together, known as joint purchasers, specific rules apply regarding Stamp Duty Land Tax (SDLT). One significant aspect of these rules is the application of higher rates of SDLT. This article explains when these higher rates come into play for joint purchasers.

When Higher Rates Apply

Higher rates of SDLT will apply in the following cases:

• If the transaction would be subject to higher rates for any of the joint purchasers when considered individually.
• If a spouse or civil partner of any of the joint purchasers would qualify for higher rates if they were a purchaser themselves.

To delve deeper into the conditions that determine this, you can refer to SDLTM09770 and the following sections.

Conditions for Higher Rates

To understand whether higher rates apply, we need to consider certain conditions, identified as A to D. These conditions check if either the joint purchasers or their spouses/civil partners would be liable for higher rates had they been the sole purchasers. Here is a brief overview of these conditions:

• Condition A: Considers whether the purchaser owns any other property.
• Condition B: Looks at whether the purchaser will be purchasing an additional property.
• Condition C: Evaluates the status of the purchaser in terms of ownership of more than one dwelling.
• Condition D: Checks if the purchaser’s spouse or civil partner would also be purchasing the property.

It’s important to understand that these conditions apply irrespective of the way the interest in the property is held. Whether the purchasers are joint tenants (together as owners) or tenants in common (holding separate shares), the same rules apply.

What Counts as a Joint Purchaser?

It’s essential to know who qualifies as a joint purchaser under SDLT regulations. According to HMRC guidelines, an individual who is not a spouse or civil partner of any purchaser can still be a joint purchaser. However, there are specific criteria:

• If they have absolutely no beneficial interest in the property, they are not considered a joint purchaser for SDLT purposes.
• This lack of beneficial interest must be documented in writing.

A beneficial interest means having rights to the profits from the property, income generated by it, or the right to live in it. If the person is entitled to any of these, they are deemed to have a beneficial interest, making them a joint purchaser.

Practical Example

To illustrate how these rules work in practice, consider the following scenario:

Let’s say there are two friends, Tom and Sarah, planning to buy a flat together. Tom already owns a house, while Sarah is a first-time buyer. Because Tom owns another property, the higher rates would apply to both of them when purchasing the flat.

Now, imagine that Tom is married to Lucy. Lucy does not have an interest in the flat, and if she were a purchaser, she would also be deemed to have a beneficial interest. In this case, because Tom qualifies for the higher rates, it means both he and Sarah would face higher SDLT on their joint purchase.

Documentation Requirements

If one purchaser is not considered a joint purchaser because they lack beneficial interest, it’s vital to have written documentation that clearly states this. This written declaration should specify their role and confirm that they will not receive any income, capital proceeds, or occupancy rights in connection with the property.

Conclusion

In summary, understanding when higher rates of SDLT apply for joint purchasers is vital for anyone involved in buying property together. Whether due to the individual circumstances of joint purchasers or their spouses/civil partners, it’s important to consider every factor that might qualify the transaction for higher rates.

The specific rules around beneficial interest and associated documentation further clarify who is subject to these higher rates. If there’s any uncertainty, seeking professional guidance is advisable, as these rules can impact the overall cost of purchasing property.

For further information and guidance on SDLT rules, refer to the relevant HMRC publications.

Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: Higher Stamp Duty Rates for Joint Property Purchasers and Spouses Explained

View all HMRC SDLT Guidance Pages Here