We are divorcing – Does Stamp Duty Land Tax apply?

When going through a divorce or separation, it is important to consider the potential impact of Stamp Duty Land Tax (SDLT) on property transactions as part of the financial settlement.

Here is a summary of the key points to consider:

1. Exemption for Spouses: If a property transaction is between spouses as part of divorce proceedings or separation, SDLT is typically exempt if:
   • It is made under a court-approved order.
   • It is part of a an agreement by the spouses in preparation for, or in connection with, divorce;
   • It involves a judicial separation or a separation order.

However, if the transaction involves someone other than a spouse or if the spouse is purchasing an additional property (such as a second home or investment property), then SDLT may apply, along with additional surcharges.

1. Refund for Replacement Homes: If one spouse is buying a new main home and has paid a surcharge (for example, the higher rate for additional properties), they may be eligible for a refund. It is essential to be aware that these refunds are time-sensitive and need to be claimed proactively.
2. Relief for Named Owners: In some cases, a spouse who remains the named owner of the matrimonial home for the benefit of their former spouse may qualify for relief if they’re purchasing a new home for themselves. However, this relief is subject to specific conditions.

What You Should Do:

• Seek Specialist Advice: Each divorce or separation situation is unique, so it is crucial to seek tailored financial and tax advice to ensure that you fully understand the implications of property transactions and SDLT.
• Contact a Family Law Professional: Getting in touch with a family law expert can help you navigate these aspects, especially when considering property transfers and tax planning on separation.

The above is a guide to some of the considerations arising during a separation, however you should always seek specialist legal, financial and tax planning advice tailored to your particular circumstances.

To discuss any aspect of your family circumstances and the various options available to you, please contact us today at family@collinshoy.com or call us on 020 8866 1820 to speak to speak to one of our highly experienced Family Law team.