Stamp duty on a transfer of equity depends on the chargeable consideration involved, which usually means any cash paid for the share plus any portion of the mortgage the incoming owner takes on. If that combined figure stays at or below £125,000, no Stamp Duty Land Tax is owed. Many family transfers with no cash and no mortgage attract zero tax, but a mortgage on the property can produce a tax bill even when no money changes hands. SDLT applies only to properties in England and Northern Ireland.
How the Chargeable Consideration Is Calculated
HMRC does not treat a transfer of equity as a normal property sale, but it does look for anything of monetary value moving between the parties. Chargeable consideration covers cash paid for the other person’s share, plus any mortgage debt the incoming owner becomes responsible for. Assuming a mortgage counts as giving value because it relieves the other party of a liability.
HMRC’s own guidance shows how this works. A property worth £700,000 has a £600,000 mortgage. One owner transfers half the property to a partner, who takes on 50% of the mortgage. The chargeable consideration is £300,000, and SDLT is calculated on that figure rather than on the property’s market value.1GOV.UK. Stamp Duty Land Tax: Transfer Ownership of Land or Property
Cash and debt combine when a buyout involves both. Two people own a house valued at £550,000 with a £200,000 mortgage. One buys out the other by paying £175,000 in cash and taking on the other person’s £100,000 share of the mortgage. The chargeable consideration is £275,000.1GOV.UK. Stamp Duty Land Tax: Transfer Ownership of Land or Property
The mortgage figure has to be exact. Use the outstanding balance on the date of the legal transfer, taken from your latest statement, not a rounded number. A small difference can push the consideration into the next tax band.
Current SDLT Rate Bands
From 1 April 2025, the residential rates are:
- 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 bands are progressive, so each rate applies only to the portion of the consideration falling within it.2GOV.UK. Stamp Duty Land Tax: Residential Property Rates On the £275,000 buyout above, that means 0% on the first £125,000, 2% on the next £125,000 (£2,500), and 5% on the remaining £25,000 (£1,250). Total SDLT: £3,750.
First-Time Buyer Relief
If you are the person being added to the title and you qualify as a first-time buyer, a higher nil-rate band applies. First-time buyers pay no SDLT on the first £300,000 and 5% on the portion between £300,001 and £500,000. The relief disappears entirely if the chargeable consideration exceeds £500,000, and everyone involved in the transaction must be a first-time buyer for the relief to apply.2GOV.UK. Stamp Duty Land Tax: Residential Property Rates
Higher Rate Surcharge for Additional Properties
An extra 5% is added to each SDLT band if, at the end of the transaction, any person involved in the purchase owns more than one residential property worth £40,000 or more. This catches a common scenario: you add a partner to your home, but they already own a buy-to-let or a flat elsewhere. The surcharge then applies to the whole transaction.3HM Revenue & Customs. Higher Rates of Stamp Duty Land Tax
Transfers between spouses or civil partners do not trigger the higher rates, provided no one else is involved in the transaction.3HM Revenue & Customs. Higher Rates of Stamp Duty Land Tax
When No Stamp Duty Is Due
Several common transfer situations produce no SDLT, either because the consideration is too low or because a statutory exemption applies.
Gifts and Low-Value Transfers
A genuine gift of property where no cash changes hands and no mortgage debt moves with it has zero chargeable consideration, so no SDLT is due. You do not need to file an SDLT return for transactions where no money or other payment changes hands, and the same applies to any freehold transfer where the total chargeable consideration is less than £40,000.4GOV.UK. Stamp Duty Land Tax: Transactions That Do Not Need a Return
Watch out for gifts where a mortgage remains on the property. Gift someone a half-share of a home with a £300,000 mortgage and the recipient is taking on £150,000 of debt. That debt counts as chargeable consideration. A return is required, and SDLT may be due, even though no cash was paid.
Divorce and Dissolution of Civil Partnership
Under Schedule 3 of the Finance Act 2003, transfers between spouses connected with divorce, annulment, or judicial separation are fully exempt from SDLT. The exemption covers transfers made under a court order, transfers made after the court order has been granted, and transfers made under an agreement in contemplation of the divorce or separation. Paragraph 3A provides an equivalent exemption for civil partnerships.5Legislation.gov.uk. Finance Act 2003, Schedule 3 These transfers do not need to be reported to HMRC.4GOV.UK. Stamp Duty Land Tax: Transactions That Do Not Need a Return
A separating couple can transfer the family home entirely to one spouse, even with a substantial mortgage, without triggering any SDLT. The exemption applies regardless of the property’s value or the size of the mortgage assumed.
Inheritance
Property acquired through a will or under the rules of intestacy is exempt under Schedule 3, Paragraph 3A of the Finance Act 2003.6GOV.UK. Stamp Duty Land Tax Manual – SDLTM00570 No return is required.4GOV.UK. Stamp Duty Land Tax: Transactions That Do Not Need a Return
Mortgage Lender Consent
If the property has a mortgage, the lender must agree before anyone can be added to or removed from the title. This sits outside the SDLT question but trips people up all the same. The lender will run credit checks on any new owner and assess whether the remaining owners can maintain payments if someone is being removed.
Lenders sometimes impose new conditions before granting consent, and they can refuse. If consent is refused, the only option is to repay the mortgage in full, which may mean remortgaging elsewhere and paying any early redemption fee to the existing lender. Consent can take several weeks, so start that conversation early and do not assume it will be automatic just because the transfer is between family.
Filing the Return and Paying
Where an SDLT return is required, it must be filed within 14 days of the effective date of the transfer, and payment is due by the same deadline. A solicitor or conveyancer will normally handle the filing and payment. Anyone acting without representation has to use the paper SDLT1 form. HMRC issues an SDLT5 certificate once the return is processed and any payment clears, and HM Land Registry will not register the change of ownership without it.7GOV.UK. Stamp Duty Land Tax Online and Paper Returns
Late Filing Penalties
Miss the 14-day deadline and HMRC applies automatic fixed penalties:
- Up to 3 months late: £100
- More than 3 months late: £200
- More than 12 months late: a tax-based penalty on top of the fixed penalty, potentially equal to the full tax owed
Interest also runs on any unpaid tax from the day after the 14-day deadline.7GOV.UK. Stamp Duty Land Tax Online and Paper Returns The fixed penalties apply even when no tax is actually due. If a return was required and was not filed, the penalty stands.
What You Need Before You File
Getting the figures straight before starting the return avoids costly errors. You need:
- The exact outstanding mortgage balance on the transfer date, from your latest statement
- The amount of any cash payment for the equity share
- The property title number, from the deeds or from HM Land Registry
- Full legal names and addresses for every party
Most calculation errors happen with the mortgage balance. If the property is being transferred among several people, the split of the debt each person takes on has to be clear, because it directly sets each person’s chargeable consideration.
Scotland and Wales
SDLT applies only to properties in England and Northern Ireland. Scotland replaced SDLT with Land and Buildings Transaction Tax in 2015, with its own rates and thresholds set by the Scottish Government.8Scottish Government. Land and Buildings Transaction Tax (LBTT) Wales replaced SDLT with Land Transaction Tax from 1 April 2018.9GOV.WALES. Land Transaction Tax: Overview Both work on similar principles for transfers of equity, and mortgage debt taken on still counts as consideration, but the rate bands, thresholds, and exemptions are different. For a property in Scotland or Wales, check the relevant tax authority rather than relying on the SDLT figures above.