Transferring ownership of property or land in England or Northern Ireland can sometimes trigger Stamp Duty Land Tax (SDLT). Whether you’re transferring property as a gift, during a divorce, or when moving in together, understanding the rules can help you avoid unexpected costs. This guide breaks down when SDLT applies, when it doesn’t, and how to calculate your potential tax.
What Is SDLT on Property Transfers?
SDLT applies when ownership of property or land is transferred to someone else in exchange for payment—also known as “consideration.” This includes situations like:
- Taking over a mortgage.
- Paying money for a share of a property.
- Transferring property to a company.
If there’s no payment involved (e.g., a gift), SDLT may not apply—but you might still need to file an SDLT return.
Tip: Use the HMRC SDLT calculator to check if you owe tax.
Property Transfers Due to Marriage or Moving In Together
When a property is transferred because of marriage, a civil partnership, or moving in together, SDLT might apply if:
- The new owner takes on a mortgage.
- The mortgage amount they take on is above the SDLT threshold.
Example:
Priya and Raj get married, and Priya adds Raj to her property’s ownership. The house has:
- £400,000 market value.
- £300,000 mortgage.
Raj takes responsibility for half the mortgage: £150,000.
SDLT Calculation:
- Threshold for residential properties: £250,000 (until 31 March 2025).
- Raj’s share is £150,000, which is below the threshold.
SDLT Payable: £0
Property Transfers Due to Divorce, Separation, or Civil Partnership Dissolution
If you’re transferring property due to:
- Divorce.
- Legal separation.
- Ending a civil partnership.
and the transfer follows a court order or formal agreement, no SDLT applies—regardless of the property’s value or any mortgage.
Tip: Keep documentation like the court order or settlement agreement as proof.
Transfers of Jointly Owned Property
When joint owners transfer part of their share to one another, SDLT applies only if:
- Money changes hands.
- The person receiving the share takes on a mortgage.
Example:
Amit and Sana own a flat equally. It’s worth £400,000 with a £300,000 mortgage.
Amit buys Sana’s 50% share for:
- £100,000 (cash payment).
- £150,000 (half of the mortgage).
SDLT Calculation:
- Total consideration: £100,000 (cash) + £150,000 (mortgage) = £250,000.
- SDLT threshold: £250,000 (until March 2025).
SDLT Payable: £0
Property Transfers as a Gift or Inheritance
You usually don’t pay SDLT when a property is:
- Gifted with no mortgage.
- Inherited through a will.
Exception:
If the property is gifted but the recipient takes on an existing mortgage exceeding the SDLT threshold, SDLT applies to the mortgage value.
Property Transfers to or from a Company
SDLT applies when property is transferred to a limited company, even if the company owner is also the property owner.
Key Rules:
- Residential property transfer to a company: SDLT applies to the market value, not the mortgage amount.
- Non-residential property: SDLT applies based on actual consideration (price paid or mortgage transferred).
Example:
Transferring a residential property worth £600,000 to a company you own.
SDLT Calculation (until 31 March 2025):
- £250,000 = 0%
- £675,000 (portion from £250,001 to £925,000) = 5%
Total SDLT: £17,500
When SDLT Doesn’t Apply
- Transfers due to court-ordered divorce settlements.
- Gifts with no mortgage attached.
- Inherited property left in a will.
- Transfers below the SDLT threshold.
How to Pay SDLT on Property Transfers
- Complete the transfer with your solicitor or conveyancer.
- File an SDLT return (even if no tax is due) within 14 days.
- Pay the SDLT using the HMRC payment details.
Tip: Your solicitor often handles the filing and payment for you.
SDLT Penalties for Late Filing
Late filing or payment can result in:
- £100 fine (up to 3 months late).
- £200 fine (over 3 months late).
- Interest charged on overdue amounts.
Understanding SDLT rules for property transfers helps you avoid unexpected costs and legal issues. Always check if SDLT applies when taking on a mortgage, transferring to a company, or splitting joint ownership. Use the HMRC SDLT calculator for quick estimates and seek professional advice if unsure.
FAQ’s
When does SDLT apply to property transfers?
SDLT applies when property ownership changes with a payment involved, like taking on a mortgage or paying for a share.
Do I pay SDLT when transferring property to my spouse?
If the transfer involves taking on a mortgage above the SDLT threshold, SDLT may apply. Otherwise, it’s usually tax-free.
Is SDLT payable when inheriting property?
No SDLT applies when property is inherited through a will, regardless of the property’s value.
What happens if I transfer property to a company I own?
SDLT applies based on the market value of the property, not the mortgage, when transferring to a limited company.
Do I need to file an SDLT return if no tax is due?
Yes, most property transfers require an SDLT return, even when no tax is payable.