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Stamp Duty and Job Related Accommodation.

Is 3% surcharge applicable?

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A new client who is a minister of religion (and therefore lives in job related accommodation) had a property which was designated with HMRC as the main residence which they then sold in June 2021 (no CGT due to main residence).  The client is now purchasing a replacement main residence closer to where his daughter lives as he intends to retire in a few years time and the solicitor is informing the client that the surcharge is payable as their is no legislation that accounts for job related accommodation (he is a vicar).  The case is further complicated by the fact he officially owns 25% of the house his mum lives in.  

My initial thoughts when looking through the stamp duty legislation is that the 3% is payable as the previous property wasn't lived in and he partly owns another residential property.

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By David Ex
23rd Aug 2021 13:25

I think if he has an interest in another residential property, he’s liable.

Haven’t seen the guidance recently but suspect it’s that simple.

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By Justin Bryant
23rd Aug 2021 13:34

The June 2021 property sale looks a bit iffy re PPR if he did not, as a matter of fact, live there (albeit there was a main residence election on it).

The SDLT replacement of a main residence test is arguably more strict (or less generous) than re CGT and so 3% SDLT surcharge will be payable re his 25% interest in his mum's house - assuming it's worth >£40k.

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Replying to Justin Bryant:
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By iknell
23rd Aug 2021 13:54

The June 2021 Property Sale is fine due to TCGA 1992, s222(8) as it specifically says that the intention to live there is sufficient (and HMRC wouldn't take on God to prove otherwise) . But I feel you are correct re the Stamp Duty surcharge being payable.

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Replying to iknell:
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By Justin Bryant
23rd Aug 2021 14:29

Yes; good point re s222(8). A bit of a tax loophole that, as one could treat any BTL etc. as a PPR.

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Replying to Justin Bryant:
Psycho
By Wilson Philips
23rd Aug 2021 14:47

Not any BTL etc, Justin. Only in cases where the owner is in job-related accommodation.

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Replying to Wilson Philips:
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By Justin Bryant
23rd Aug 2021 14:54

No sh*t.

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By Hugo Fair
23rd Aug 2021 14:52

"The case is further complicated by the fact he officially owns 25% of the house his mum lives in".
No it's not further complicated - it wasn't at all complicated before you introduced that point (since the vicar presumably doesn't have any ownership of the job related accommodation).
But the 3% surcharge applies when purchasing any property when you already have ownership of part/all of another property (anywhere in the world)*

* = see https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-res... for more details.

N.B: And don't forget the 3% is not 'merely' an increase in the %age applied to bands, it is a 'slab' charge applied to the whole transaction.

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By Duggimon
24th Aug 2021 11:05

As far as SDLT is concerned, the job related accommodation is a complete red herring and only the property already owned can and probably does mean the 3% surcharge applies.

If there's enough of a disparity in values between the 25% share of his mum's house and the house he intends to buy, it might be worth considering selling that 25% share prior to the purchase, if that's an option.

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Replying to Duggimon:
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By iknell
24th Aug 2021 11:37

Unfortunately that isn't an option. The house is jointly owned with siblings and the occupant is their mother.

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Replying to iknell:
By Duggimon
24th Aug 2021 16:02

I had guessed as much but thought they might perhaps buy your client out.

With an agreement, a sibling agreement that is, not a legal one and not written down anywhere or even hinted at anywhere, indeed you should burn my post after reading, that he buy it back from them a bit later on.

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