Should we divorce to cut stamp duty costs?

My husband and I currently live in a council flat with our children and we would like to buy the property as first-time buyers.

In the future, we also hope to let the property and buy a second home. What is the best possible way we can approach this in order to avoid the heavy stamp duty taxes in future? Is it safer for one of us to buy the first time and then the other buys the second home? Should we get divorced to avoid paying additional taxes? JT, VIA EMAIL

Since April 2016 a stamp duty “surcharge” has been applied to property purchases where it is not the replacement of your main residence. The 3pc charge is applied in addition to the normal rate of stamp duty, which is paid on portions of the property’s value above thresholds.

Where only normal stamp duty rules apply, the first £125,000 of a property is tax free, 2pc is charged on the next £125,000, 5pc on the next £675,000, 10pc on the next £575,000 and 12pc on anything above that.

But the surcharge adds three percentage points to these rates. This means the first £125,000 is now subject to a 3pc charge, the next £125,000 a 5pc charge and so on.

For the purposes of stamp duty, married couples and civil partners are treated as if they are a single person. Therefore, the surcharge would be added even if one of the properties were in one person’s name and another in the other person’s name.

An extreme – and perfectly legal – strategy would be to get divorced or legally separated, said Nimesh Shah of Blick Rothenberg, the accountants.

He explained the surcharge applies to married couples and those in a civil partnership and, crucially, that they are living together. Spouses are treated as living together unless they are separated by a court order, by a deed of separation or in circumstances where separation “is likely to be permanent”, Mr Shah said.

Our reader could avoid the additional stamp duty by officially separating from or divorcing her husband, as long as each property became a main residence. If one was purchased as a buy-to-let, the surcharge would still apply.

Mr Shah added: “It would seem

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a fairly extreme step to divorce to circumvent the extra stamp duty. However, I have seen couples delaying marriage in order to avoid the 3pc charge.”

For those that want to buy a new property before they have sold their main residence, the Government gives you three years to sell an existing main residence. This means home owners do not lose out simply because of a delay in sale.

However, the exemption is retrospective, meaning the additional stamp duty must be paid up front and then reclaimed via HM Revenue and Customs once the main residence is sold.

Married couples can divorce to avoid extra stamp duty costs