SDLT and spouse transfer/ declaration of trust

Trusts Discussion
1

Hi,
I have been asked to transfer a share of the property (mortgaged at £250,000) from Husband -Wife for income tax purposes (50/50 to 99%/1%).The couple own a property in France and i believe that the additional SDLT will potentially be a concern. Does the fact that he is transferring a share of a property he already owns cause the additional 3% SDLT on the value of the mortgage being transferred or is it exempt as he already owns the property? Thank you

2

If the wife takes a bigger share, or all of the other’s share, and also takes over the mortgage in exchange, then there is a “chargeable consideration” and so SDLT may apply as the consideration (mortgage) is above the threshold.
Full details can be found here: Stamp Duty Land Tax: transfer ownership of land or property - GOV.UK

3

The 3% rate would seem to apply (see FA 2003 Sch 4ZA); para 3(4)(a) in particular states:

" (4)Condition C is that at the end of the day that is the effective date of the transaction—
(a)the purchaser has a major interest in a dwelling other than the purchased dwelling…" [property in France]

As to whether there is any “chargeable consideration” this will depend upon whether the transferee (wife), for example, indemnifies the transferor (husband) wrt the mortgage element.

Malcolm Finney

4

My understanding was that from 22.11.17, the 3% higher SDLT rate does not apply to transfers between spouses living together. (Para 9A Sch. 4ZA FA 2003).

Ihsan Ali
I Will Solicitors Ltd

5

Would Income Tax form 17 be an option here?

Richard C. Bishop

6

I agree agree with Ihsan’s post above. I overlooked the FA 2018 amendment.

If the legal title is held jointly by both spouses and each spouse is to receive a different percentage of generated rental income which reflects actual beneficial percentages held then Form 17 will need to be completed. Form 17, however, is relevant only wrt income tax.

Malcolm Finney

7

Perfect thank you all.

8

SDLT is payable, without the 3%, on any part of the mortgage liability assumed by the transferee. One wonders what the mortgagee’s attitude is.

Ray Magill