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Properties for husbands and wives, civil partnerships and cohabiting couples – watch out for stamp duty on mortgages!

Investment properties owned jointly are taxed accordingly, rental profits and capital gains are split between each tax payer. Furthermore, the whole or part ownership of such properties can be transferred between spouses (married or civil partnership couples) and the transfer will be exempt from capital gains and inheritance tax. This creates tax planning opportunities so that income and capital gains tax allowances and rate bands for each individual can be applied to the total income and gains from a portfolio of properties to minimise combined tax liabilities.

However, a complication often overlooked when considering this area is stamp duty and this has become more prevalent since the introduction of the 3% surcharge for second properties in April 2016. As a reminder an additional 3% is added to the standard stamp duty rates for second property purchases at all levels and so the stamp duty nil rate band becomes a 3% band on prices from nil to £125,000 and the 2% band becomes 5% from £125,001 to £250,000 etc.

Stamp duty is charged on the price paid or consideration provided and so transfers between spouses without payment would not incur stamp duty unless a mortgage is involved. Usually a lender would require both parties owning a property to be named on the mortgage and so a transfer of any proportion would require a transfer of mortgage liability which is effectively a price paid. Stamp duty is payable on the value of the mortgage transferred.

For example, a £350,000 investment property is owned by one person as a second property with a buy-to-let mortgage of £250,000. That person’s main home is owned jointly with his or her spouse (or the spouse owns any other property for that matter) and the couple decide to transfer the investment property so that they each own 50%. The mortgage value transferred is £125,000 and stamp duty will be payable at 3% equating to £3,750. Note that prior to April 2016 this transaction would have been within the nil rate band of stamp duty.

Another common example is where two people get together each owning their own home. They keep one property as an investment and live in the other one as their main home. There is no tax problem at this stage but further down the line they decide to remortgage their main home to take advantage of a better rate of interest and they transfer the property to joint ownership so that the mortgage application is strengthened by both of their incomes. One person takes on 50% of the existing mortgage liability and so has effectively paid for their new interest in a second property. Stamp duty is payable accordingly.

Before considering a transfer of ownership it is important to compare the stamp duty cost to the economic and other benefits. For substantial mortgage liabilities within property portfolios it may be beneficial to restructure debt before transferring ownership.

Limited Companies – are you considering running your business through a Limited Company?

There is more to running a business than saving tax. It is often said that tax shouldn’t be the reason for business decisions but instead should be taken into account when considering how to achieve your goals and objectives. You wouldn’t invest in new equipment unless you had a commercial need or use for it. However, you might select energy efficient equipment qualifying for enhanced tax allowances if that made the numbers more advantageous. On the other hand you might simply select energy efficient items for reasons of corporate social responsibility.


Limited companies still offer strong tax planning advantages over partnerships and sole traders. Aside from tax the other advantages of running your business through a limited company include:

Limited liability status – good insurance policies go a long way to protect you from the consequences of unfortunate events but what if an employee, member of the public or customer had a claim against you that wasn’t fully covered? In most cases the claim would be against the company and not the owner personally thus protecting personal assets such as the family home. Compare this to partnerships where partners are personally, jointly and severally liable for their shared business. One partner’s mistake could lead to another partner being sued.

Professional image – limited liability status may be perceived by some to indicate a more established and professional business. This can help with marketing.

On the other hand there are disadvantages to limited companies. . .


Companies are registered at Companies House where records are open to inspection by members of the public. This means that restricted details about the identity of the directors, shareholders and the company itself are in the public domain and freely available on the internet. This includes annual financial statements. Small companies are only required to file simple financial statements with far less detail.

It can take time for a new company to build up a track record and credit rating. This can make raising finance more challenging if required during the early stages. This applies to the incorporation of a long established business as well as a new start-up.

Companies and directors must comply with the Companies Act and Corporation Tax legislation. The rules affecting directors and shareholders are more complex and in particular care should be taken to observe the distinction between company and private assets and transactions. These rules also bring what is commonly referred to as additional “red tape”.


Deciding which legal form is right for your business is a personal choice. Accountants are trained in this area and good accountants will be only too happy to guide you through this process.