Stamp duty 'Cupid Tax' could hit couples with more than one home
Changes to stamp duty rules could penalise couples who own more than one property, even if they're not renting any of them out.
Couples, particularly older couples, could become unintentional victims of the new stamp duty rules, with some people dubbing it a 'Cupid Tax'.
So what's changing and why could it affect couples?
How stamp duty is changing
From April 1, the government will charge an extra 3% stamp duty on purchases of residential property if the purchaser already owns another property. The move was announced in the Autumn Statement in November.
The aim is to discourage landlords and property investors from expanding their portfolios, and ideally freeing up more homes for first-time buyers.
The change will mean some second home owners will pay five times more tax than before.
A first-time buyer buying a £200,000 home will pay stamp duty of £1,500. This is based on paying 0% on the first £125,000 of the property value and 2% on the portion between £125,001 and £250,000.
But from April, landlords will have to pay 3% for the first £125,000 and 5% (instead of 2%) on the amount between £125,001 and £250,00. This gives them a total bill of £7,500.
The Cupid tax
But it’s not just landlords who’ll be hit with the tax surcharge – it’s anyone buying a second home.
Married couples and those in a civil partnership will be treated as a single unit for the purposes of the new rules. That means that if one of the couple already owns a property, any property purchase by, or with, the other partner will be subject to higher rates of stamp duty.
The Association of Taxation Technicians (ATT) claims this discriminates against individuals in a marriage or civil partnership. It says the rules around stamp duty should be like income tax, where individuals are taxed independently.
One way around the rule is for married couples planning to buy a second property to do so before April 1 – but that doesn’t give you much time.
Unmarried, but cohabiting, couples have the option of having one property in each of their names, so they won't be hit.
[Related story: Nearly half of people 'would lie to get a mortgage']
The tax on marriage?
The ATT is calling the stamp duty surcharge oddity a “tax on marriage and civil partnerships” but these are not the only people who’ll be paying more under the new regime.
Many parents now jointly buy a house with their child because it’s the only way the child can afford to get on the property ladder. But if the parents already own a home it will invoke the extra stamp duty charge, as the child’s home will count as a second property.
You could also be caught by the stamp duty surcharge if you own a home abroad and decide to buy one in the UK too. This means Brits owning a property abroad and foreigners buying in the UK could both be hit with a higher stamp duty bill.
Another quirk is that companies owning 15 properties of more could be exempt from the stamp duty hike. So large-scale property investors – typically those landlords hated by tenants the most – will escape the extra cost.
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