Person A, non-uk resident, owns a commercial shop worth £240,000.
Person B, uk resident, owns a residential house worth £250,000.
A and B wish to exchange premises with each other. Both are unconnected parties. No cash consideration will be given, it will be a straight forward swap.
From what I understand, if they swap premises with each other, A will not pay any CGT as non-uk resident and nor will B pay any CGT as he purchased property some months ago and capital value has not increased.
Regarding SDLT, A will not pay any SDLT as currently there is a SDLT holiday for residential property.
My question is will B have to pay SDLT on the shop as it is a commercial property even though no consideration is being transferred?
Is it a possibility that they both just gift the respective property to each other and therefore no SDLT on the gifts? or are they rules that prevent this?
Any help would be much appreciated.
Replies (9)
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Is it a possibility that they both just gift the respective property to each other and therefore no SDLT on the gifts?
Are you advising one of these parties? B, perhaps, the UK resident?
What'll you do if, on your suggestion, B gifts property to A in anticipation of receiving a generous gift from A, and A makes no such gift? I'd guess B will then sue you. I would, in their shoes. Will your PII rescue you?
I'm not aware of any specific legislation. But good luck in convincing HMRC that a gift of one property coinciding with the gift of another property from the donee is not an exchange.
I appreciate your concern, however in the given scenario, it would be highly unlikely that one party would defraud the other.
Defraud is a revealing choice of word. Can X defraud (unconnected) Y by failing to make them a gift? Any fraud here would be against HMRC by pretending that the transfers were gifts, when quite clearly they are not.
You don't need legislation that deems something to be what it already is.
Land transactions in writing.
Conveyancing lawyers , both parties, would be a good knowledge source.
Excambion deals do have consideration, the property received is likely consideration, what else can it be?
Here is the Scottish guidance re LBTT re same, I suspect your SDLT is similar.
https://revenue.scot/land-buildings-transaction-tax/guidance/lbtt-legisl...
Re gifts, no self respecting solicitor would countenance