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  • Tax

    Does my wife need to pay the 3% SDLT?

    Hi,
    I am quite confused with SDLT tax. Here is our situation,

    My wife and I own two buy to let properties (50:50 split joint tenant) at the moment.
    I am thinking of changing it to tenants in common with 99:1 split.
    The mortgage on each property is quite low (one is 54k, another one is 46k).
    So if my wife owns 99% of both, the transaction on each property is lower than 40k (one is 27k another is 23k).

    In this case, does she still need to pay SDLT? I read that the 3% surcharge is for over 40k, but I am not really sure if the 40k is for each transaction or some different way to calculate?

    Many Thanks

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    Hi

    No she wouldn't the 3% rate no long applies in these circumstances and the total debt moving to her is <£125k so no stamp duty at all.

    Deb

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    Debbie Franklin

    Director of Tax Peplows Limited

    CTA ACA FCCA

    I don't think this going to work if trying for income splitting. The hrmc are on top of your ideas already.

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     Wisdom involves an integration of knowledge, experience, and deep understanding that incorporates tolerance for the uncertainties of life as well as its ups and downs. 

    hi,

    do you have any documents or official link on this? I actually think Debbie could be right.

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    Hi Vanessa,

    As stupid as I am, from the link you followed, I got this line:

    Currently, all transactions under £40,000 do not require an SDLT return to be filed with HMRC where no tax is due. This provides simplicity and minimises taxpayer burden. This will remain the case for purchases of additional residential property.

    As the mortgage is like 54k (so giveing my wife 49%) is a transction of 27k, that means it won't need to fill a SDLT return, which means no tax to pay. Am I right?

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    Why the unequal split?  Income splitting or other reason??

    I have 50/50 spilt on 3 BTL and I'm non working at present.

    Form 17 is something I'm considering after learning about it on Property Tribes.

    https://www.gov.uk/guidance/sdlt-transfer...r-property

    However from my current understanding consideration has to occur. See link above.

    I'm still trying to get my head  round it myself.

    Perhaps what I'm trying to achieve is different from why you want do it.

    But I suspect it's the same reason.

    There is future CGT consequences. Going one way then trying to back the other.

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     Wisdom involves an integration of knowledge, experience, and deep understanding that incorporates tolerance for the uncertainties of life as well as its ups and downs. 


    I think consideration will occur. But for my case, the consideration is way smaller than the 40k, so it means no SDLT?

    You then fill in form 17 bit later (within 60 days)

    Thanks

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    Hi

    Will post link tomorrow as not good with my phone!

    You are correct to split the income you need to submit form 17 with proof of ownership %.cgt treatment follows ownership but you can change later before you market for sale

    Deb

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    Debbie Franklin

    Director of Tax Peplows Limited

    CTA ACA FCCA

    Might need some help myself. Thanks Debbie.

    Is this a potential section 24 avenue of mitigation. ESP if borderline now at BTR?

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     Wisdom involves an integration of knowledge, experience, and deep understanding that incorporates tolerance for the uncertainties of life as well as its ups and downs. 

    It is yes depending of course on tax position of spouse and pretty straightforward

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    Debbie Franklin

    Director of Tax Peplows Limited

    CTA ACA FCCA