Stamp duty on a transfer of equity is charged when the person joining a property’s title gives something in exchange for their share, and since April 2025 the tax-free threshold has been £125,000. The “something” is usually their share of the existing mortgage, and often some cash on top. If the total sits at or below £125,000, no tax is due. Above that, the bill rises through banded rates. Divorce transfers, genuine gifts of mortgage-free property, and inheritance fall outside the tax entirely.
The rules apply to property in England and Northern Ireland. Scotland and Wales operate their own equivalents.
What HMRC Counts as Payment
SDLT is charged on “chargeable consideration,” which is the total value the incoming owner gives for their share. Cash paid to the outgoing owner is the obvious component. The bigger one, in most transfers of equity, is mortgage debt.
When someone joins a title and becomes jointly responsible for the existing mortgage, their share of that debt counts as payment. Joint owners are treated as holding equal shares, so a new 50% co-owner on a property carrying a £400,000 mortgage is treated as taking on £200,000 of consideration. Add £50,000 in cash to the original owner and the chargeable consideration climbs to £250,000.1Legislation.gov.uk. Finance Act 2003 Schedule 4 Paragraph 8
No money needs to change hands for a tax bill to appear. The promise to help pay the mortgage is enough, because HMRC treats debt assumption as the economic equivalent of a cash payment.2GOV.UK. Stamp Duty Land Tax
Rates From April 2025
The temporary £250,000 nil-rate band expired on 31 March 2025. Standard residential rates now are:3GOV.UK. Stamp Duty Land Tax – Residential Property Rates
- Up to £125,000: 0%
- £125,001 to £250,000: 2%
- £250,001 to £925,000: 5%
- £925,001 to £1.5 million: 10%
- Above £1.5 million: 12%
The rates work in bands. Only the slice of consideration inside each band is taxed at that band’s rate. On £250,000 of consideration, the first £125,000 is tax-free and the next £125,000 is taxed at 2%, giving a bill of £2,500. On £200,000, the taxable slice is £75,000, so the bill is £1,500.
The drop from £250,000 back to £125,000 matters. A transfer that would have been tax-free in 2024 can now carry a four-figure bill, particularly in areas where property values, and mortgage balances, run high.
When Surcharges Push the Bill Higher
Additional Property Surcharge
If the person being added to the title already owns another residential property, the higher rates apply. From 1 April 2025 the surcharge is 5 percentage points above the standard bands, so the first £125,000 is taxed at 5% rather than 0%, the next band jumps to 7%, and so on.4GOV.UK. Higher Rates of Stamp Duty Land Tax
A common trigger: one partner already owns a flat from before the relationship and is now being added to the other partner’s home. That existing interest tips the whole transaction into the higher rates.
Someone replacing a main residence can reclaim the surcharge portion if they sell their previous main home within 36 months of the transfer. If the old home hasn’t sold by the time the transfer completes, the higher rates are paid upfront and the refund is claimed later. The claim must be made within 12 months of the sale of the previous home or the SDLT filing date, whichever is later.
Non-UK Resident Surcharge
A further 2% applies when any buyer in the transaction is not UK resident. It stacks on top of the standard rates and the additional property surcharge where both apply.5GOV.UK. Rates of Stamp Duty Land Tax for Non-UK Residents
HMRC treats an individual as non-resident if they were not in the UK for at least 183 days in the 12 months before the effective date of the transaction. A refund is available if the buyer is present in the UK for 183 days during any continuous 365-day period within a two-year window centred on the transaction date. The refund is claimed by amending the return within two years of the effective date.
When No Stamp Duty Is Due
Some transfers of equity fall outside SDLT altogether, and most of them don’t need a return either.6GOV.UK. Stamp Duty Land Tax: Transactions That Don’t Need a Return
Divorce, Dissolution, and Separation
Transfers between spouses or civil partners are exempt when made as part of a divorce, dissolution, annulment, or legal separation. The exemption covers transfers made under a court order and those made under a written agreement between the parties in connection with their separation.7Legislation.gov.uk. Finance Act 2003 Schedule 3 Value is irrelevant. The remaining spouse can take on the whole mortgage and still owe no SDLT.
The exemption does not cover a married couple who aren’t separating. Adding one spouse to a property the other already owns is a taxable transfer of equity like any other, and the incoming spouse pays SDLT on their share of any mortgage debt.8GOV.UK. Stamp Duty Land Tax: Transfer Ownership of Land or Property Marriage is not, by itself, a blanket SDLT exemption.
Genuine Gifts With No Mortgage
A gift with no consideration attached is not subject to SDLT. A parent who owns a property outright and transfers it to a child without payment passes no chargeable consideration, so nothing is owed and no return is required. The property’s market value doesn’t matter, because SDLT looks at what the recipient gives, not what the property is worth.
Add a mortgage and the position changes. If £300,000 of debt is still secured against that property, the child’s share of that debt is chargeable consideration, and the “gift” becomes a taxable transaction. This is where the largest surprise bills in family transfers tend to appear.
Inheritance
Property passing under a will or the rules of intestacy is not treated as a land transaction for SDLT. The beneficiary owes nothing and files no return, whatever the property is worth.
Filing and Paying
The SDLT return must be filed and any tax paid within 14 days of the effective date of the transaction, which is normally the day the legal documents are completed.9GOV.UK. Stamp Duty Land Tax Online and Paper Returns The 14-day deadline applies even when no tax is due, unless the transaction is one of the exempt categories that doesn’t require a return.
Most transfers of equity are filed electronically by a solicitor or conveyancer. Individuals acting without professional representation use the paper SDLT1 form. The return needs the property type code, details of everyone involved, the total consideration, and the outstanding mortgage balance, so a current mortgage statement from the lender is worth getting before starting.
Payment has to reach HMRC within the same 14-day window. Faster methods (online banking, debit card, CHAPS, Faster Payments) clear quickly; Bacs and cheque need three working days, so those need to be sent well before the deadline.10GOV.UK. Pay Stamp Duty Land Tax
Penalties for Missing the Deadline
A late return triggers an automatic £100 penalty. If it is still outstanding after three months, a second £200 penalty applies. Returns filed more than 12 months late attract the £200 fixed penalty plus a tax-based penalty of up to 100% of the SDLT owed, depending on whether HMRC treats the failure as careless or deliberate.11GOV.UK. Penalties for Late Land Transaction Return (SD7) Guide
Interest also runs on unpaid tax from the day after the 14-day deadline. The late payment rate as of January 2026 is 7.75%, which compounds quickly on larger bills.12GOV.UK. HMRC Interest Rates for Late and Early Payments