‘I was handed £79,500 stamp duty bill af­ter my divorce’

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Stamp duty rules are pe­nal­is­ing those cou­ples who keep their split cor­dial, dis­cov­ers Sam Mead­ows

Cou­ples who divorce am­i­ca­bly are be­ing dis­ad­van­taged by Bri­tain’s com­plex stamp duty regime, warn tax and mar­riage ex­perts. Stamp duty was sharply in­creased in April 2016 for buy­ers who al­ready owned a prop­erty or part of a prop­erty. An ex­tra three per­cent­age points would ap­ply on top of the stan­dard rates of stamp duty.

Although de­signed to tar­get land­lords, many di­vorc­ing cou­ples found them­selves caught out when one party came to buy a new prop­erty. A hus­band who wished to buy again but re­tain a stake in the mar­i­tal home, in which his for­mer wife and chil­dren re­mained, is one ex­am­ple.

The Novem­ber Bud­get in­cluded a spe­cial mea­sure to help such peo­ple, giv­ing ex­emp­tion to the higher rate of duty where spe­cific court or­ders re­lated to the ex­ist­ing mar­i­tal home. But this means cou­ples who do not go to court still lose out.

Kate Daly, co-founder of Am­i­ca­ble, a firm that spe­cialises in non-court di­vorces, said the pol­icy need­lessly dis­crim­i­nated against this group.

“You don’t need to go to court or pay a so­lic­i­tor if you want to divorce,” she said. “We are de­lighted by the change an­nounced in the Bud­get, be­cause the sur­charge wasn’t in­tended to tar­get di­vorc­ing cou­ples.

“But the leg­is­la­tion is un­clear. I just don’t see the ne­ces­sity of hav­ing a court or­der. A lot of peo­ple can’t af­ford to have one drawn up.”

A spokesman for HM Rev­enue & Cus­toms con­firmed that the ex­emp­tion ap­plied only to cou­ples with a “prop­erty ad­just­ment or­der” con­cern­ing the mar­i­tal home. Those with­out will be left out of pocket.

Divorce spe­cial­ist Re­becca Tay­lor, of Aurea Fi­nan­cial Plan­ning, agreed that the pol­icy un­fairly af­fected those who did not wish to go to court.

“Most sep­a­rat­ing cou­ples want to avoid go­ing to court if they can,” she said. “At the mo­ment the only way th­ese cou­ples can avoid the sur­charge is by get­ting divorced and then neatly sell­ing their share of the house to their ex-part­ner. That just doesn’t hap­pen in real life.”

Hav­ing to pay the sur­charge can more than dou­ble the tax bill on a pur­chase as the ad­di­tional three per­cent­age points are charged on the value above £40,000. For ex­am­ple, a buyer of a £300,000 prop­erty would pay £5,000 in duty with­out the sur­charge but £14,000 with it.

Caro­line Le Je­une, a tax spe­cial­ist at ac­coun­tants Blick Rothen­berg, said: “Th­ese rules seem un­nec­es­sar­ily pe­nal and may trig­ger ad­di­tional costs for a sep­a­rat­ing cou­ple at a point when fi­nances are stretched.”

Also dis­ad­van­taged are those who have gone through a divorce since the sur­charge was in­tro­duced. The HMRC spokesman con­firmed that

‘The law is try­ing to say you can’t have an am­i­ca­ble divorce and get on with your life’

the amend­ment would not ap­ply ret­ro­spec­tively, mean­ing none of those who had pre­vi­ously over­paid would be re­funded.

Among this group is Neal Gandhi, 50, who be­gan divorce pro­ceed­ings with his ex-wife two years ago.

Pre­fer­ring not to go to court and place ad­di­tional stress on their two young chil­dren, the pair came to a pri­vate fi­nan­cial agree­ment, which in­cluded Mr Gandhi’s ex-wife liv­ing in the fam­ily home.

He bought a home with his new part­ner in Jan­uary 2017 with­out pay­ing the sur­charge, which he be­lieved did not ap­ply to him. Then in Oc­to­ber, shortly be­fore the pol­icy was amended, HMRC wrote to him de­mand­ing the £79,500 in un­paid duty.

Mr Ghandi said he had signed a divorce pe­ti­tion and was buy­ing with a new part­ner so he felt it was clear he had no in­ter­est in the for­mer mar­i­tal home.

“It strikes me that the law is try­ing to say you can’t have an am­i­ca­ble divorce and get on with your life,” he said. “They are go­ing af­ter the wrong peo­ple.”

Neal Gandhi said he felt he had been un­fairly hit by com­ing to a pri­vate agree­ment with his ex rather than ob­tain­ing a court or­der

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