If you're currently saving to give your son or daughter a helping hand onto the property ladder, you might find you need to put aside a little bit more than you bargained for to cover tax charges.
The Chartered Institute of Taxation (CIOT) yesterday cautioned that the additional three per cent charge on stamp duty land tax (SDLT) announced in last November's Autumn Statement, which was intended to apply to those purchasing a buy-to-let property or a second home, could also be applicable to parents who are jointly purchasing a property with their children.
"A joint purchase may be made for reasons that have a clear social value and not a bid to set up a buy-to-let business," said Brian Slater, chair of the CIOT’s Property Taxes Sub-Committee. "Life is complex and there are many situations where parents want to support their adult children in buying a home. Taking even a small interest (while owning another property) means that the extra three per cent is payable on the whole of the purchase price."
Government ran a consultation into the new higher rate of SDLT from December last year to this month and is currently analysing the feedback it received.
Previously, the Association of Taxation Technicians (ATT) warned that the extra SDLT charge could also affect couples where one person in the relationship already owns property, as married couples and those in a civil partnership are treated as a single person for the purposes of the new rules.
The ATT also pointed out that the proposed charge could hit those who had had the misfortune of not being able to complete the sale on their old property before purchasing a new one.
"Overall, we believe that the proposed design of this charge will go further and will catch more situations than was originally perceived when George Osborne first announced this measure last November," Yvette Nunn, co-chair of ATT’s Technical Steering Group, said at the time.