Q&As

A property is owned by a husband and wife, and a company gave money to contribute towards the purchase. If the money is then not repaid and there is a declaration of trust to give a share of the property to company, would there be stamp duty land tax and capital gains tax issues?

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Produced in partnership with Mary Ashley of Old Square Tax Chambers and Sean Randall of Blick Rothenberg
Published on LexisPSL on 29/03/2019

The following Tax Q&A Produced in partnership with Mary Ashley of Old Square Tax Chambers and Sean Randall of Blick Rothenberg provides comprehensive and up to date legal information covering:

  • A property is owned by a husband and wife, and a company gave money to contribute towards the purchase. If the money is then not repaid and there is a declaration of trust to give a share of the property to company, would there be stamp duty land tax and capital gains tax issues?
  • SDLT
  • CGT

In this Q&A, the husband and wife own the property 100% as between themselves and are UK resident. The company does not presently have a share in the property.

SDLT

If a loan was made by the company to the husband and wife, and that loan is satisfied by the company in return for receiving an undivided share of the property (effected by the husband and wife declaring a trust in respect of the property in favour of themselves and the company in specified undivided shares), then the acquisition of that interest by the company would be a land transaction for the purposes of stamp duty land tax (SDLT). There is no doubt that the interest acquired would be a ‘chargeable interest’ for SDLT purposes notwithstanding that it is an equitable interest only: see section 48 of the Finance Act 2003 (FA 2003).

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