SDLT Planning

14th April 2016

Transferring Second Property into Joint Names: Beware SDLT trap!
We commonly advise married clients who are considering a transfer of rental property from one spouse into joint names. Where the owner spouse is a higher rate taxpayer, there is often a potential to make use of the other spouse’s basic rate tax band. The potential income tax savings are likely to become more valuable, as the restriction of tax relief on finance costs is phased in from April 2017.

As well as income tax, it is important to consider the capital gains tax position, particularly where the property was previously a main residence. A transfer after moving out can result in a loss of capital gains tax reliefs, as mentioned in my colleague Barbara Nicholas’ previous blog.

Stamp Duty Land Tax can be a further complication, exacerbated by the introduction of the 3% additional stamp duty charge for second homes in April 2016, and the change in how stamp duty bands are operated. Where a property is transferred from sole to joint names, whilst there is rarely any cash payment between spouses, the value of any mortgage that the donee spouse assumes responsibility for is treated as ‘consideration’ for stamp duty purposes. Where the property is a second home, and this ‘consideration’ is over £40,000, there will be a 3% charge on the value of the mortgage being assumed by the donee spouse. For those considering a transfer into joint names, we recommend taking professional advice, to ensure that you aren’t caught out by any of these pitfalls.



 
Other items in Blogs
 
Kim Clayden
13th April 2018 Making Tax Digital Seminar Two – St Ives

       Our second MTD seminar was in St Ives at the Slepe Hall Hotel on Thursday 12th April. Which was a much more convivial venue. A smaller group meant more personal conversations with our clients and we were able to give a number of clients the time they needed to fully understand the next steps for…

Read More »

Daniel Coleman
11th April 2018 Making Tax Digital ‘Roadshow’ – Huntingdon

We have begun the first of eight seminars discussing the preparation needed for making tax digital. Our first seminar kicked off in Huntingdon at the Marriott hotel and was a great success. With around 30 people attending we explained to clients what making tax digital was, how it was going to effect them and more…

Read More »

Paul Jefferson
5th April 2018 Reclaiming VAT: Checking the validity of your supplier invoices.

  VAT registered businesses will be aware that they can only reclaim VAT on business purchases if they have a valid VAT invoice.   For supplies over £250, this invoice should disclose: Supplier: sales invoice unique sequential invoice number, name, address and VAT number. Date and tax point, if different Your name and address Description…

Read More »

Scott Butcher
5th April 2018 Deadline Approaching for ATED forms

  If you have a residential property which is worth more than £500,000 and is held in a company then you will be required to complete an Annual Tax on Residential Dwellings (ATED) form. The deadline is fast approaching with all ATED forms for 2018 to 2019 tax year being due for filing by 30th…

Read More »

Vanessa Pearson
5th April 2018 HMRC loses IR35 case

  A contractor in the construction industry, Mark Daniels, has won his appeal against HMRC. In MDCM Ltd v Revenue & Customs, HMRC were defending their decision that a contract between Mr Daniels’ personal service company MDMC Ltd and recruitment agency Solutions, which provided his services to Structure Tone Ltd,  should have been caught by…

Read More »

Richard Alecock
5th April 2018 Top mistakes tax payers make when completing their tax returns.

  Making mistakes on self assessment tax returns however innocent can lead to enquiries, investigations and additional tax, interest and penalties. Below are some of the top mistakes many people make: Forgetting to include income from a previous employment that ended part way through a tax year. Forgetting to include benefits from a previous employment…

Read More »