Navigating SDLT in complex situations

You have likely seen recent headlines about ex-Deputy Prime Minister Angela Rayner and underpaid Stamp Duty Land Tax (SDLT) on her current home. Her situation highlights just how complex SDLT can be when standard rules don’t neatly apply.

From what we understand, the issue arose because Angela Rayner’s circumstances were unusual. She had use of another home that wasn’t technically hers – it was owned by a trust set up for her disabled son. Following her divorce, arrangements were made so her children could remain in their previous family home while the parents alternated living there. Ms. Rayner sold her share to the trust to provide stability for her son.

Even though she sought professional advice, it appears the guidance she received didn’t fully account for the nuances of her situation. This serves as a reminder that the UK’s tax system, particularly SDLT combined with trust ownership, can be incredibly complex. HMRC guidance provides a starting point, but non-standard situations often require digging into the legislation itself to ensure all factors are correctly considered.

How SDLT generally works

• If you own one or more properties and buy another, you usually pay an extra 5% SDLT

• There are exceptions. If you are replacing your main home, the surcharge can be avoided if you sell your previous home either at the same time, in the 12 months before, or within three years after the purchase

• Rules also vary for couples. For example, if one spouse already owns a property, the 5% surcharge applies even if the other spouse buys the new home. For unmarried couples buying together, the higher rate applies to the full purchase price

Trusts can complicate matters further

Ownership isn’t always straightforward. Living in a property owned by a trust may still count as owning it for SDLT purposes. In situations like Rayner’s, the property held in trust for children may mean the parent is treated as an owner, potentially triggering the additional SDLT when buying another property.

The takeaway

SDLT rules are detailed and can be tricky to navigate in anything beyond the most basic scenarios. The key is to get expert advice before making a property purchase.

If you want to make sure you’re handling SDLT correctly and avoiding unexpected bills, contact Mitch Ewer today. Our property tax expertise can help you manage even the most complex situations with confidence.