Several months ago, the Government introduced new stamp duty legislation, which means that any person owning their own home and buying an additional property will be forced to pay an extra 3% tax above what would normally fall due.
For example, a couple buying their first home, valued at £260,000, will need to pay 5% or £13,000 in stamp duty tax. If however, they are adding a new property to their portfolio, this stamp duty tax will be increased to 8% or £20,800.
This spells bad news for landlords or property investors. However, this move could also have a significant impact on divorce settlements.
As outlined in the Daily Telegraph, there are a number of scenarios affecting divorcing couples, but there also remains a degree of ambiguity about how the legislation could be applied under these circumstances.
A woman who did not have a stake in the home she shared with her husband but who is granted another property as part of a formal separation, will still be liable for the additional tax.
A spouse who leaves the marital home but retains a stake in it will also still be expected to pay the extra stamp duty too, on a new property.
There is a silver lining, however. This new legislation permits individuals who sold their main home within three years prior to November 2015, to buy another without having to pay the extra tax. In addition, separated couples are able to claim a refund on the additional tax if it can be proved that the separation is likely to be permanent, and that the shared home has been sold within the last three years.
Although the law with regards to divorce settlements will take time to integrate these new stamp duty rules, it is currently thought that it is unlikely to affect settlements which were made prior to the announcement. However, we should be prepared to see future appeal cases, where a spouse attempts to claim some sort of compensation by way of a settlement, if they can prove that the new laws have severely impacted on their finances.