These FAQs should be used as a basic introduction to the Supplement. More detailed information is available in the Legislative Guidance to help taxpayers and their agents understand whether or not their particular transaction is subject to the supplement.
- 3.01 Supporting relatives to purchase homes
Q: My daughter is finding it hard to get on to the property ladder. I would like to help her by giving her money to buy her first flat. I already own a main residence. Will the new purchase be affected by the supplement?
A: Whether the supplement affects this purchase will depend on whether you will be the owner of the flat or not.
If you give your daughter money for the purchase or guarantee the mortgage, but you will not own the flat, the supplement will not apply as your daughter will be the owner and she will own only one property. If, however, you buy the flat alone or jointly with your daughter, the supplement will apply as you will own two houses and will not be selling your main residence.
- 3.02 Acquisitions for students in further education
Q: I am thinking of buying a flat for my son to live in while he's at university. I already own the house that I live in and I won't be renting out the flat – it will only be for family use. Will the Additional Dwelling Supplement apply to this new flat?
A: If you take title to the flat when you purchase it, you will own two houses and you will not be selling your main residence. The supplement will therefore apply to the new purchase.
If your son is under 16 and takes title to the flat, you and your son will be treated as one ‘economic unit’ for the purposes of the tax and the Additional Dwelling Supplement will apply.
As you will not be selling your main residence, if you decide to purchase the flat jointly with your son, this means that the "buyer" in the transaction (you and your son jointly) will be treated as owning two houses. It does not matter that this would be your son's first purchase - the "two or more houses rule" applies to ‘the buyer’ jointly.
If however your son is over the age of 16 and takes sole title to the flat and owns no other properties, the Additional Dwelling Supplement will not apply.
- 3.03 Joint Buyers
Q: My brother and I plan to buy a house to use as a buy-to-let investment. I live with my parents but my brother owns a flat that he is not selling. As I don't own any property, will the Additional Dwelling Supplement apply to me?
A: Yes it will. Where two people buy a house jointly, each one is treated for the purposes of the Additional Dwelling Supplement as being the buyer of that property. Although you do not own any other property, your brother does. As he is not selling his previous main residence, this means that the "buyer" in the transaction (you and your brother jointly) will own two properties meaning that the Additional Dwelling Supplement will apply to this purchase.
- 3.04 Acquisitions by civil partners and cohabitants
Q: I am in a civil partnership and my partner bought the house we currently live in. I plan to buy a property and rent this out – will the Additional Dwelling Supplement apply?
A: Yes.For the purpose of the Additional Dwelling Supplement, homes purchased by married couples, those in a civil partnership and cohabitants (those living as if a married couple) along with their dependent children will be treated as being owned by a single buyer.
In the scenario above, this means the couple in a civil partnership face the same LBTT liability as a couple in a civil partnership who jointly own the home they currently live in and then jointly buy an additional residential property with the intention of renting it out.
- 3.05 Inherited properties
Q: I don't own any property and I live in rented accommodation. My father has died and left me the family home and a large sum of money. I am thinking about buying a buy-to-let property with this money to earn additional income. As this will be a buy-to-let purchase, will the Additional Dwelling Supplement apply?
A: Yes - the Additional Dwelling Supplement will apply but not purely because it will be a buy-to-let purchase.
The Additional Dwelling Supplement will apply because when the new purchase is completed, you will be the owner of two properties and will not be replacing a previous main residence.
As you are entitled to be the owner of the family home, you are deemed to be the owner.It does not matter that you may not have legally taken title to the property by registering your title in the Land Register - any inherited dwellings count towards the number of properties that you own.
- 3.06 Acquisitions by companies and other 'non-natural persons'
Q: Does the Additional Dwelling Supplement apply if the buyer is a company or some other body?
A: The Additional Dwelling Supplement applies to all purchases of residential properties by companies and other non-natural persons whether or not they already own a residential property.
Not having this rule would have introduced a relatively straightforward way to avoid paying the supplement. For example, an individual buying a second residential property through a company they owned could have avoided payment of the Additional Dwelling Supplement.
- 3.07 First purchases of residential property by company
Q: I own a company which currently rents office space for the business to operate in. I am using some of the profits to buy a rental property to generate income. The company does not own any property at all. Will the Additional Dwelling Supplement apply to this purchase?
A: Yes it will. Any purchase of a dwelling, including a first purchase, by a company or any other type of non-natural person of body will mean that the Additional Dwelling Supplement will have to be paid.