The over-riding feature of stamp duty is that you may need to pay SDLT when all or part of an interest in land or property is transferred and anything of monetary value in exchange.

Anything of monetary value that you give in exchange is called the ‘chargeable consideration’.

The rules you use to work out how much SDLT you pay depend on the circumstances of the property transfer.

You’re given property as a gift

If you get property as a gift you won’t pay SDLT as long as there’s no outstanding mortgage on it. But if you take over some or all of an existing mortgage, you’ll pay SDLT.

Example

A husband decides to transfer a half share in a property he owns to his wife. He doesn’t take a cash payment for this share, but there’s an outstanding mortgage on the property, so an SDLT filing is required, SDLT is payable, even if the husband keeps the mortgage.


If you marry, enter into a civil partnership or set up home together

You might pay SDLT when you transfer a share in a property to a husband, wife or partner when you do one of the following:

•marry

•enter into a civil partnership

•move in together

You pay SDLT if the consideration given in exchange for the share transfer is more than the current SDLT threshold for the property type.

Examples ….

.... you transfer a property to your spouse/partner who pays you half the equity and takes on responsibility for half the mortgage – those two figures are added together, an SDLT return is filed and stamp duty paid.

…. you transfer a property to your spouse/partner who takes on responsibility for half the mortgage. The mortgage debt that they’ve taken represents the chargeable consideration, an SDLT return is filed and stamp duty paid.


Divorce, separation or the end of a civil partnership

You don’t pay SDLT if you transfer an interest in land or property to your partner as part of an agreement or court order because you’re either:

•divorcing

•dissolving a civil partnership


This also applies if the partners either:

•annul their marriage

•legally separate

In these cases there’s no need to tell HMRC about the transfer, even if the value is more than the SDLT threshold.


If joint owners are unmarried and not in a civil partnership when they transfer an interest in land or property from one joint owner to another then you may have to pay SDLT.

If you transfer or divide up jointly-owned property or land: unmarried couples and other joint owners

You don’t pay SDLT if 2 or more people jointly own property (as joint tenants or tenants in common) and you divide it physically and equally and own each part separately. But, if one person takes a bigger share, or all of the other’s share, and pays cash or some other consideration in exchange, you must tell HMRC and pay SDLT

The easiest way to demonstrate this is to use HMRC’s own example

Two people own a farm jointly in equal shares. It’s valued at £2 million. They split the ownership of the farm geographically and each takes 50% of the land.

If the value of each half of the land is the same, then no SDLT is due.

But in this example the land taken by person 1 includes the farmhouse and farm buildings. This owner’s land is worth £500,000 more than the land that the other owner - person 2 - takes. The shares are:

•person 1 - £1,250,000

•person 2 - £750,000

Person 1 compensates person 2 and pays them £250,000.

SDLT is payable on this £250,000 because it’s more than the current threshold.



If the larger share is given outright as a gift

If you take a bigger share but don’t pay anything in return, there’s no ‘consideration’ given including taking on liability for a mortgage. You won’t pay SDLT, even if the value of the extra part of the share is more than the SDLT threshold. You don’t need to tell HMRC about the transaction.


Transfer the outstanding mortgage

Joint owners (this may include unmarried couples who are splitting up) may agree that just one of them will take over ownership of a property they bought together, including any outstanding mortgage.

In this case the person taking ownership will pay SDLT on the total chargeable consideration of the following (either or both):

•any cash payment that one of the couple makes to the other for their share

•the proportion of the outstanding mortgage that belongs to the share of the property being transferred


Take on a larger share of jointly owned property

When a property is jointly owned, if you split the property equally SDLT isn’t payable. But if one person takes on a larger share they may need to pay SDLT.


Inheritance

If you get land or property under the terms of a will, there’s no need to tell HMRC and you won’t pay SDLT. This applies even if you take on an outstanding mortgage on the property on the date the person died. This is on condition that no other consideration is given.