Lucinda Connell, Senior Solicitor with family law specialists solicitors, Major Family Law, the best divorce and children law specialists, says:
According to a recent report in the Telegraph, thousands of divorce settlements may potentially be open to appeal as a result of the government’s new stamp duty surcharge which leaves estranged partners unable to buy their own home following a marital split.
The new rules mean that a husband or wife who was granted an interest in a property (for example, a buy to let property or a second home) following a divorce could potentially be liable for thousands of pounds in extra tax when they purchased their own home. The surcharge, which was introduced in April this year, means that anyone who buys an additional property has to pay extra stamp duty of 3% points on top of the existing tax liability for their property’s value. The tax is particularly likely to affect women who lived with their husband but did not have a stake in the marital home, and who are granted other property following the marital split. However, it will also affect wealthy couples where one partner moves out of the family home but retains a stake in it, to stop or delay the property being sold because, for example, the couple wished to provide stability for the children.
That individual would then be subject to the extra tax. A refund can only be claimed if the separation is “likely to be permanent” and the first home is sold within three years. The law provides that anyone who sold their main home within the past three years – or, currently, before November 2015 – to buy a new one without paying the extra tax. However, a quirk means that if there was not a previous main home to sell, liability for the extra tax will arise. The Telegraph reported that a number of divorce lawyers were unaware of the new law meaning that the potential tax liability was not being factored in to settlements. This could potentially leave a number of divorce settlements open to appeal, as a spouse could argue that they had been unfairly disadvantaged by the tax which can add thousands of pounds to the cost of purchasing a new home. Further cases could also involve couples whose settlements had been decided prior to the stamp duty surcharge being announced in November 2015. In these cases however there are likely to be fewer grounds for an appeal as the law was of course not known at the time settlement was reached.
In this day and age where buy to let properties are wide spread, it is common for a separating couple to agree to transfer ownership of some or all of those properties to the other spouse. It is therefore essential that specialist family law advice is sought at the time of separation and when considering the terms of financial settlement.