SDLTM09820 | SDLT - higher rates for additional dwellings - individuals - purchasing without your spouse or civil partner - Para 9 and 9A Sch4ZA FA2003

Where an individual with a spouse or civil partner purchases an interest in a dwelling and their spouse or civil partner is not a joint purchaser, the test of whether the transaction is a higher rates transaction must be applied not only to the purchaser but to any civil partner or spouse of the purchaser as if they were the purchaser themselves.

This means that where a purchaser is married or in a civil partnership, if Conditions A to D are met by either the purchaser or their spouse or civil partner, the transaction will be a higher rates transaction. This is the case whether the spouse or civil partner is themselves a joint purchaser, or not.

This additional test does not apply if the married couple are either legally separated (by court order or deed of separation) or they are, in fact, separated in circumstances in which the separation is likely to be permanent [Para 9(3) and section 1011 Income Tax Act 2007].

From the 22 November 2017 - transfers of interests between spouses and civil partners

Before 22 November 2017, transfers of interests between spouses were subject to the same rules as other transfers when Conditions A to D were being considered.

From 22 November 2017, the higher rates rules disregard transactions solely involving the transfer of interests between spouses or civil partners while they are treated as living together on the date of purchase. ‘Living together` takes the definition in section 1011 of the Income Tax Act 2007. A married couple or civil partners of each other are treated as living together unless they are separated under an order of a Court, or they are separated by a formal deed of separation, or they are in fact separated in such circumstances that the separation is likely to be permanent.

If (before or after the transaction takes place) someone other than the spouses or civil partners has an interest in the property, the transaction will still count as a higher rates transaction. For example, a transaction would not be disregarded where an interest owned by a wife and her otherwise unrelated business partner is transferred to her husband.

Example

Mr I is transferring 50% of a buy-to-let property that he owns to his wife, Mrs I. Mrs I is paying some cash and taking over responsibility for half the mortgage debt. Mrs. I owns no other residential property, but Mr I owns a number of other buy-to-let properties.

For transactions with an effective date before 22 November 2017, the higher rates would have applied to the transfer as Mr I owns other residential properties. As a married couple other residential property owned by either spouse is taken in account in determining whether the higher rates apply.

For transactions with an effective date on and after 22 November 2017, the higher rates do not apply as a transfer between spouses is disregarded as above.