Splitting a flat into two - tax for issuing new lease?

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    Splitting a flat into two - tax for issuing new lease?

    Hi all,

    I am looking into extending and subdividing a flat, with freeholder consent and planning permission. We are share of freehold. I also have permission written into my lease than I can surrender the current one and replace it with a new one for each flat.

    My solicitor said I should grant a sub lease. When I asked ‘isn’t it better to just surrender and grant two new leases’ he said:

    “Not normally, although as you control the freehold then you can do this but you then run into potential tax problems with the freehold company disposing of its assets and SDLT which you would have to pay as you and the company are connected .”

    I don’t understand this. Why would the freehold company, or me, pay anything? Surely just the buyer of each flat (assuming the lease was created at that point) would pay the stamp duty?

    Any advice gratefully received! Thank you!

    Normally the buyer pays SDLT before registering the new owner name at Land Registry.

    You should consult a tax accountant ( not solicitor ) for advice on cgt for your situation.


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