There are some situations where the transfer of UK property does not result in a SDLT charge.
However, it is important to consider all the relevant details before confirming that no SDLT is due. For example, although there is an exemption for the transfer of property between spouses, if there is an outstanding mortgage on the property, this would be considered ‘consideration’ and SDLT may be payable on this transfer – see article Transferring a property into your husband/wife’s name
Transferring a property into your husband/wife’s name
We will now consider each of the relevant reliefs/exemptions:
Marriage/civil partnership/moving in together
There is no SDLT due on the transfer of property unless there is a mortgage on the property. There is nevertheless a requirement to tell HMRC about these transactions via an SDLT return.
Divorce
You don’t pay SDLT if you transfer an interest in land or property to your partner as part of an agreement or court order because you’re either:
· divorcing
· dissolving a civil partnership
This also applies if the partners either:
· annul their marriage
· legally separate
In these cases there’s no need to tell HMRC about the transfer, even if the value is more than the SDLT threshold.
If the larger share of a joint property is given outright as a gift
If you take a bigger share but don’t pay anything in return, there’s no ‘consideration’ given including taking on liability for a mortgage. You won’t pay SDLT, even if the value of the extra part of the share is more than the SDLT threshold. You also don’t need to tell HMRC about the transaction.
If you’re left land or property in a will
If you get land or property under the terms of a will, there’s no need to tell HMRC and you won’t pay SDLT. This applies even if you take on an outstanding mortgage on the property on the date the person died. This is on condition that no other consideration is given.
You’re given property as a gift
If you get property as a gift you won’t pay SDLT as long as there’s no outstanding mortgage on it. But if you take over some or all of an existing mortgage, you’ll pay SDLT if the value of the mortgage is over the SDLT threshold.
Building company buys an individual’s home
If a building company or property trader buys a home from someone who is buying a new home from them, the property bought by the house builder or property trader is exempt from SDLT if certain conditions are met. The person must:
· have lived in the property as their main or only home at some time during the 2 years before the building company or property trader bought it
· buy a new home from the house building company
· intend to live in the new property as their main or only home
Also, the area of land that the building company or property trader buys along with the old home mustn’t go above certain limits – normally 0.5 hectares.
Employer buys employee’s house
If an employer or property trader buys an individual’s house because they’re moving with their work, the purchase is exempt from SDLT if certain conditions are met.
You must meet all the conditions to qualify for this relief. The conditions are the following:
· employee lived in the house as their main or only home at some time during the 2 years before their employer bought it
· employer or property trader is buying the house because the employee must move as a result of a job relocation
· price the employer or property trader pays isn’t more than the market value of the property
· area of land the employer or property trader buys is within certain limits – normally 0.5 hectares
Compulsory purchases
Sometimes a local authority agrees to make a Compulsory Purchase Order on a property so that a development by another party, for example a property developer, can go ahead. The owner of the property sells it to the local authority and the local authority sells it to the property developer.
As there are 2 sales, there’d normally be 2 amounts of SDLT to pay. But, if the property developer is doing the development, the local authority can get relief from SDLT when it buys the property.
A body that has the legal power to compulsorily buy land or property can claim this relief. They can still claim even if the sale isn’t made under those powers if the sale allows development by a third party.
Property developer subject to planning obligations
As a condition of giving planning permission to a developer, a planning authority might ask the developer to provide amenities for the community – like a school. These are known as ‘planning obligations’.
Usually the developer transfers the building to the local authority to run once it’s finished. But there may be 2 successive charges of SDLT if the developer buys the land from its original owner and then transfers the finished building to the local authority.
The developer can claim the relief so that they don’t pay SDLT on the first sale.
Transfer of property between companies
Companies can claim relief within the same group that buy or sell property to or from each other. The buyer of the property can claim the relief if both:
· the buyer and seller are both companies
· at the effective date of the transaction both companies are members of the same group
Relief for charities
As long as certain conditions are met, charities can get relief from SDLT when they buy land and property for charitable purposes.
A charity can claim some relief when they buy land and property jointly (as tenants in common) with a non-charity buyer. The charity claims relief on its share of the property.
HMRC can withdraw the relief if, within 3 years of the transaction, if the charity still owns the property, and either:
· stops being a charity
· uses the property for purposes that aren’t charitable
Right to Buy properties
A Right to Buy transaction is the sale of a dwelling either:
· at a discount by a public sector body like a local housing authority
· when there’s a preserved right to buy
In both cases, this covers the grant of a lease of a dwelling. The SDLT is worked out on the discounted price the buyer pays. It doesn’t include any additional payments which may become due.
Registered social landlords
If a registered social landlord buys land and property they can claim relief from SDLT if either:
· most of the board members of the registered social landlord are tenants living in properties from the social landlord
· the seller of the property is a ‘qualifying body’, for example a local council a public subsidy funds the sale