The recent media scrutiny of Angela Raynor’s advice and decisions regarding SDLT is a stark reminder of the potential consequences of errors in tax reporting. The UK tax system can be incredibly complex, and also punitive when errors are made. This highlights the need to take specialist tax advice to ensure that the full implications of any planning are understood.
Parents will often wish to make gifts or purchases or property to their children, for example a gift of the family home, or perhaps a purchase of an investment property to generate an income for the child’s future. Matters will be further complicated if there are any trusts as part of the planning. In these cases, the parent will need to understand the consequences for inheritance tax, capital gains tax and SDLT purposes, and how these might interact with each other depending on the planning envisaged.
SDLT is a highly specialised area of tax legislation, with a number of deeming provisions which may apply to tax some person unexpectedly. SDLT can in some circumstances become payable on transfers of property even if this does not involve a sale, for example on transfers made as a gift or as part of an arrangement between spouses or co-habiting couples where there is debt secured on the property, or a variation of an estate after the owner dies. On any new purchase of a property, the buyer should take advice if he or she has any interest in another property (anywhere in the world), which might affect the rate of SDLT payable on the purchase, but also consider whether there might be future capital gains tax issues on disposals.
If you have any questions or comments on SDLT or property taxes, or if you are considering a property transaction, please contact our private client team or our property team for more information.