Stamp duty surcharge for a person with a property overseas

Question

Suppose there is a person that lives in the UK for 4 years in a rented property. Moreover, they own half a flat overseas jointly with their parent (that costs less than £10.000).

If I understand correctly, in case they by a property in the UK, they need to pay a Stamp duty surcharge (right?).

Assume, they decide to gift the half of the flat to the parent now. Obviously, this process might take some time. But I wonder, would it be an offence to say that they don't own a property anymore when they pay the Stamp duty for the flat that they buy now?

Answer 1

There are two things at play here and I am not sure which you are referring to.

1. There is a table of rates on the HMRC site which clearly states that you pay 3% on top of the given rates if, at the end of the process, this is not the only property that you own. In this case if you have gifted any other previously-held property to someone else you would not pay the additional 3%.

2. There is a relief on stamp duty for first-time-buyers meaning that if you and all the other joint buyers of the property have each never owned an interest in another property, and the property costs less than £500,000, you pay less than the stated rates in the table; specifically if this applied you would pay 0% SDLT on the price up to £300,000 and 5% on the portion of the price between £300,001 and £500,000. This discount would not apply if any of the buyers had previously owned property, even if you had subsequently sold or gifted it away.

The link in my point 1 above makes all this pretty clear and lays out the applicable rates in each situation.

I would also like to point out that doing things like disposing of property at below market value in order to reduce your tax liability is generally not a wise approach and may be treated as tax avoidance, resulting in financial penalties etc. You should consult with a lawyer and/or tax professional before taking any such steps as you may end up getting yourself into hot water.

This really all goes to show that any property-related transactions can have far-reaching consequences and things that may seem simple or harmless at the time can come back to bite you later, hence professional advice being recommended before embarking on any of it.