Recent Budget Announcements mean Divorced Couples will be Exempt from Stamp Duty Surcharges
Following the recent 2017 Autumn Budget announcement, divorcing couples across the country who faced the prospect of paying higher stamp duty rates have been given a reprieve, with Chancellor Phillip Hammond announcing changes to stamp duty surcharges on second homes.
Having first been introduced in April 2016 aimed at those buying additional property to their own home, the 3% surcharge has had a number of implications that were initially unintended by the former Chancellor, George Osborne.
Stamp Duty for Divorcing Couples
Those separating and seeking a divorce were thought to have been experiencing extremely unfair consequences as a result of the stamp duty surcharges, particularly when the court orders that one member of the couple is allowed to live in the jointly owned home. When this has been the case, it has been common for the other partner to buy their own home, meaning that they would see stamp duty surcharges for buying an additional property to the one seen to be their home.
This surcharge was placed at 3%, but the changing in the law would see this surcharge removed for those looking to obtain a divorce, preventing the surcharge from being applied when they purchase the second property. This would also be the case where an individual purchases the property from their spouse or civil partner, again seeing the 3% charge removed.
During the recent budget, Chancellor Philip Hammond opted to take action against such situations, giving divorcing couples exemption from the additional stamp duty charges. However, when declaring the changes, it could be interpreted that the Chancellor suggested official evidence would be needed, rather than just an agreement between the two individuals.
Changes to Current Legislations
It is widely thought amongst industry experts that the initial legislation was introduced hastily with a number of associated issues, and that maybe it shouldn't have been introduced until at least all of the potential issues were addressed and ironed out. Many have also agreed that the recent changes will bring significant benefits to everybody that may find themselves in these situations.
In relation to this, it was also recently announced that the Government will make further changes to when the surcharges may apply. In recent times, giving a small portion of the property to a partner would mean that they don't have to pay the surcharge on their property. With the buyer able to suggest that they no longer had a 'major interest' in the property, they were able to purchase another property without paying the surcharges on top.
These changes do not apply to properties situated in Scotland, as LBTT applies to them, and it will only apply to properties based in Wales until 31st March 2018, as the Welsh Land Transaction Tax is to be introduced from 1st April 2018.
If you are thinking of separation or divorce and are concerned about your financial situation then K J Smith Solicitors can help. Our team of family law specialists have handled financial matters in divorce ranging from the straightforward to the highly complex.
For more information or to arrange a free 45 minute consultation, please contact us today on 01491 630000 (Henley on Thames), 0118 418 1000 (Reading Head Office), 0118 418 1200 (Reading Central), 01256 584000 (Basingstoke), 01483 370100 (Guildford), 01494 629000 (Beaconsfield), 01235 375500 (Abingdon), 01344 513000 (Ascot), 01635 785 100 (Newbury), 01962 587900 (Winchester) or email info@kjsmith.co.uk.
