Natural love and affection

Most would imagine that a transfer of property between husband and wife would be an easy and simple transaction, requiring just a few signatures and a small fee for your lawyer. However, this is not always the case – you may have to pay Stamp Duty Land Tax (SDLT) of up to 4% of the price of the property.

If, for example, a husband who jointly owns a property with his wife transfers the ownership into her sole name, but subject to an existing mortgage, he may have to pay SDLT depending on the amount of the mortgage. Although gifts are exempt from SDLT, and this seems to be a gift as no money has passed hands, the exemption will not apply. That’s because the husband is being released from his obligations under the mortgage. He has clearly benefited and therefore it cannot be a true gift for SDLT purposes.

So, before you transfer a property as a ‘gift’ or due to ‘natural love and affection’ you should find out first whether you will end up having to make an extra gift to the taxman.

For further information as to when SDLT is chargeable on the transfer of property, please contact:

Kirpal Kaur
Tel +44 (0)20 7440 7090
kirpal.kaur@mishcon.com