property tax advisor

Land Taxes: property tax advice

We have seen that land taxes are often the tax forgotten about in divorce.  We are often instructed once the divorce or separation is final and one of the parties is buying a new home, only to discover that they may now face an additional rate of stamp duty. We can and do take on post-divorce work but we would suggest seeking advice earlier on in the proceedings to avoid any pitfalls later on.

Property Tax Advisor: expert advice on Land & Buildings Transaction Tax

Normally, completion of the purchase of land is a chargeable land transaction. From April 2015, Land and Buildings Transaction Tax (LBTT) applies to land transactions in Scotland and from 1 April 2018, Land Transaction Tax (LTT) applies to land transactions in Wales.

Whilst the underlying rules applying to LBTT, LTT and Stamp Duty Land Tax (SDLT) are broadly similar in nature, the taxes are not identical and it is important to seek professional advice. In recent years there have been a number of changes to stamp duty, so this is an area to pay particularly close attention to.

Land Taxes

Stamp duty land tax is a tax on land transactions. Normally, completion of the purchase of land is a chargeable land transaction. From a April 2015 Land and Buildings Transaction Tax (LBTT) applies to land transactions in Scotland and from 1 April 2018, Land Transaction Tax (LTT) applies to land transactions in Wales.  Whilst the underlying rules applying to LBTT, LTT and SDLT are broadly similar nature the taxes are not identical.

Additional Rate

If an individual is purchasing a property in England and Northern Ireland and at the end of the day of the transaction the individual will own 2 or more properties they will be charged an additional 3% rate of stamp duty land tax. For individuals who are replacing a main home within 3 years the additional rate charge will not apply. Individuals who have ceased to own the marital home but still own an investment property will need to be aware of the replacement rules to ensure they do not incur the additional 3% charge.

Wales & Scotland

Land taxes have been devolved to Wales and Scotland, however the underlying theme of the way the land taxes operate is broadly the same with the major changes being the rates charged. Individuals with property in Wales & Scotland will need to ensure they are factoring in the applicable rates to them.

Separating/Cohabitees

There is a blanket provision which says that any transaction in connection with divorce or the dissolution of a civil partnership will not incur any liability for capital gains tax purposes.  This exemption does not apply to couples who are unmarried. Therefore any transfer of land where the couples were never married, need to seek land tax advice early on in the discussions to ensure they do not create any unforeseen tax liabilities.

As an employment lawyer, Sofia is so helpful to me and my clients. She presents her advice with absolute confidence and clarity and can be relied upon to pick up a matter quickly and insightfully. She is a pleasure to work with and someone I am always happy to recommend.

Gemma Murray

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