Inherited properties and stamp duty land tax

Inherited properties and the extra 3% stamp duty land tax (SDLT) charge: When could you be caught by the uplift?

Recently, we were approached by a client for whom we were buying a property but who was also in the process of inheriting a share in a property from his mother.   He was very concerned that his purchase would be subject to an additional 3% SDLT due to inheriting the other property and did not want to be penalised as a result. 

Alex Wavell, Moore Barlow’s Private Client Chartered Tax Advisor, looked into this and sets out below – by way of a case study – when the additional 3% could bite.  

Buying 46 Pepper Road and inheriting 24 Salt Lane

Andrew lives in rented accommodation, after selling his house many years ago. He is now considering buying a property, 46 Pepper Road. His grandmother died four years ago, and in her will she left her estate to Andrew and his sister. The residuary estate includes a house, 24 Salt Lane.  Andrew would like some SDLT advice.

Do I need to pay SDLT on inheriting 24 Salt Lane?

No, you are not required to pay SDLT on any share of the property which you inherit under your grandmother’s will.

Will 24 Salt Lane have any impact on my potential purchase of 46 Pepper Road.

Maybe. It depends on when you are considered to have inherited 24 Salt Lane, and what percentage you inherited.

If you inherit 24 Salt Lane after you purchase 46 Pepper Road, there is no impact.

If you inherit(ed) 24 Salt Lane less than three years before you purchase 46 Pepper Road, and you inherit(ed) a maximum of a 50% share, there is no impact.

If you inherit(ed) 24 Salt Lane more than three years before you purchase 46 Pepper Road, or if you inherit(ed) more than 50% of 24 Salt Lane before you purchase 46 Pepper Road, then you will be liable to an extra 3% of SDLT on your purchase.

When am I considered to have inherited 24 Salt Lane?

This will be the date when you become, or became, entitled to a share of 24 Salt Lane. When your grandmother died, your entitlement was merely to a share of her residuary estate. Your entitlement to 24 Salt Lane only arises when either the executors transfer a share of it to you, or the residue of the estate is ascertained. If you are unsure if this has yet happened, it would be worth speaking to your grandmother’s executors.

How Moore Barlow can help

Recognised as one of the leading rural services teams in the south, we have a deep understanding of every aspect of rural life. Having advised many clients over generations, we are experienced in dealing with all issues that can arise.

Contact the Rural Services team now.