New SDLT And Transfer Of Equity

Hi
I am currently in the process of purchasing my first home. However I am impacted by the new second homes SDLT and have to pay additional 3% for the following reason:

My dad bought a flat about years ago with his wife for about £120k Cash (there is no mortgage on the flat). He added my name on the title deeds (at the time I didn't understand the consequences, but he did it in good faith so that I could have something if he passes).

From my research, it appears I have no other option but to remove my name from his title in order to avoid the fee. But it is not something I would really like to do, so does anyone have any idea of any way around this that would allow me to keep my interest, or some of it?

Thanks
John

2 Answers

What % interest in the flat do you have and what is it worth now? Under the new rules it appears that only interests you currently hold in other properties worth £40,000 or more are relevant, so if your share in the flat is worth less than £40,000 you may not be affected. Note the use of the words "may" and "it appears" though - some of the new legislation is a bit vague and points probably won't be cleared up until they are tested in court. Your best course of action could be to establish what your share in the existing flat is worth and if it is less than £40,000 write to HMRC explaining the circumstances and see if they will confirm in writing that you will not have to pay the duty. If they won't then you could seek advice from a specialist tax barrister, though this could be expensive. Alternatively you do have up to 3 years after completion to appeal if you think you have overpaid, so you could pay the duty and then try your luck afterward (this way HMRC would be forced to look at the facts and give you a decision whereas they might not do this before you have paid the tax).

Another thought is that your father could leave his share (or part of his share) to you in his will and you could then be removed from the title but still be entitled to a share upon his death. Before doing that though you should speak to a probate solicitor who can explain certain issues such as possible challenges to the will under the Inheritance (Provision for Family and Dependents) Act.

Hope this helps

HI

Thank you for your response.
There are 3 names on the property deeds (my dad, his wife and me) so it is split 3 ways. On the title it says its a 'title absolute' and has our 3 names on it, so I believe I own a 3rd, which takes me above the £40k threshold :(
It was bought for £124, but I suspect it is worth probably double that now.

The will option is another option I can explore, but I think my dad will be reluctant to do that now.

Are there other options that I can explore? I currently own a Ltd Company - are there any options in transferring my share to the company?

Regards
John