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  • Tax

    Higher rate SDLT on primary residence

    Thanks for your reply


    "(7)For the purposes of sub-paragraph (5) the purchased dwelling may become a replacement for the purchaser’s only or main residence if—

    (a)on the effective date of the transaction (“the transaction concerned”) the purchaser intended the purchased dwelling to be the purchaser’s only or main residence,

    (b)in another land transaction whose effective date is during the period of three years beginning with the day after the effective date of the transaction concerned, the purchaser or the purchaser’s spouse or civil partner disposes of a major interest in another dwelling (“the sold dwelling”), and

    ©at any time during the period of three years ending with the effective date of the transaction concerned the sold dwelling was the purchaser’s only or main residence."


    Is this the section you refer to? The property I am purchasing from my partner is my "only or main residence" My other property is a BTL, not my residence. This seems  fairly straightforward. How is it possible that my solicitor thinks  I need to pay the higher rate? Is this piece of legislation current? Is there something else I am missing?


    Obviously, I desperately want to pay the ordinary residential SDLT, just trying to be sure before I challenge my solicitor


    Many thanks

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    If you are buying a further share in your main home, get your Solicitor to look at 7A of Sch 4ZA FA2003

    EXCEPTION WHERE PURCHASER HAS PRIOR INTEREST IN PURCHASED DWELLING

    AnchorAnchor7A(1)  A chargeable transaction which would (but for this paragraph) fall within paragraph 3 or paragraph 6 does not fall within that paragraph if–

    (a)the purchaser had a major interest (“the prior interest”) in the relevant purchased dwelling immediately before the effective date of the transaction, and

    (b)the relevant purchased dwelling had been the purchaserʼs only or main residence throughout the period of three years ending with the effective date of the transaction.

    Anchor7A(2)  Sub-paragraph (1) does not apply if–

    (a)the prior interest is a term of years absolute or a leasehold estate, and

    (b)immediately before the effective date of the transaction, the remaining term of the prior interest is less than 21 years.

    Anchor7A(3)  Sub-paragraph (1) does not apply if immediately before the effective date of the transaction–

    (a)the purchaser is beneficially entitled as a joint tenant to the prior interest, and

    (b)there are more than three other joint tenants.

    Anchor7A(4)  Sub-paragraph (1) does not apply if immediately before the effective date of the transaction the purchaser is beneficially entitled as a tenant in common or coparcener to less than a quarter of the prior interest.

    Anchor7A(5)  In this paragraph “relevant purchased dwelling” means–

    (a)the purchased dwelling mentioned in paragraph 3(1)(b), or (as the case may be)

    (b)the purchased dwelling which meets the conditions mentioned in paragraph 6(1)©.

    History

    Para. 7A inserted by FA 2018, s. 40 and Sch. 11, para. 3, with effect in relation to any land transaction of which the effective date is, or is after, 22 November 2017.

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    Debbie Franklin

    Director of Tax Peplows Limited

    CTA ACA FCCA

    I agree with Debbie's above comments. You might also refer your solicitor to para SDLTM09814 of the SDLT Manual (in gov.uk) which explains the rules in para 7A.

    Marc.selby@laytons.com

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    Quick update

    I referred my solicitor to the relevant legislation and HMRC manual. Their response:"I cant comment on that, I'm not a tax adviser". Funnily enough it was them that ADVISED me that I had to pay higher rate Stamp duty land TAX. So I took it upon myself to phone HMRC. A very pleasant 2 minute phone conversation concluded with the HMRC representative agreeing with me, and by extension, Marc and Debbie. He is writing to my solicitors. This is not the first mistake my solicitors have made but it is the costliest. If I thought I could move solicitors without incurring too much cost or, more importantly, starting the whole process again, I would


    Thank you very much to Debbie and Marc, without your help I am fairly sure I would have ended up unnecessarily paying the higher rate.

    Derek

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    No problem. Unfortunately many Solicitors seem to absolve themselves of all responsibility on SDLT but happily charge you for completing the return. I could not say to a client yes I will complete your self assessment return but cannot possibly advise you on tax! The one they seem to miss regularly is multiple dwelling relief, one case where all the documentation stated my client was buying a block of 4 flats!

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    Debbie Franklin

    Director of Tax Peplows Limited

    CTA ACA FCCA