Business tax – guidance

Stamp Duty Land Tax: transactions that don't need a return

Find out which property transactions are exempt from Stamp Duty Land Tax (SDLT).

Overview

SDLT no longer applies in Scotland. Instead you pay Land and Buildings Transaction Tax when you buy a property.

Some land and property transactions are exempt from SDLT. You don’t need to tell HMRC about these. They include:

  • transactions where no money or other type of payment changes hands
  • property left to you in a will
  • property transferred because of divorce or dissolution of a civil partnership

You don’t need to tell HMRC about some leasehold transactions either.

You need to tell HMRC about all other land and property transactions on an SDLT return.

Exempt transactions

Property transactions where no money or other type of payment changes hands

You can give property or land away or transfer ownership to another person. If there’s no ‘chargeable consideration’ you don’t have to pay SDLT or file a return. The chargeable consideration is a payment that can be cash or another type of payment, including:

  • goods
  • works or services
  • release from a debt
  • transfer of a debt, including the value of any outstanding mortgage

Property left in a will

Property left to you in a will is almost always exempt from SDLT. This includes property that has outstanding debt on it, eg a mortgage.

It also applies to a transaction that changes the terms of a will within 2 years of someone dying. The transaction is exempt from SDLT as long as:

  • a different beneficiary gets the property
  • the new beneficiary doesn’t pay a compensation payment, this includes taking over a mortgage

Divorce or dissolution of a civil partnership

A transaction is exempt from SDLT when a couple divorce, separate or end their civil partnership, and either they:

  • agree to split their property and land between them
  • split the property under the terms of a court order

Find out about SDLT on land and property transfers and linked transactions.

Freehold property purchases involving transactions less than £40,000

You don’t need to pay SDLT or tell HMRC about freehold land and property transactions with a total chargeable consideration of less than £40,000. But the total chargeable consideration includes any linked transactions.

Leasehold transactions you don’t need to notify HMRC about

Leasehold purchases with a lease of 7 years or more

You don’t have to tell HMRC or pay SDLT when:

  • you buy a new or assigned lease of 7 years or more, as long as the premium is less than £40,000 and the annual rent is less than £1,000
  • you assign or surrender a residential or non-residential lease (granted for 7 years or more) and the chargeable consideration is less than £40,000

Leasehold property purchases where the lease is for less than 7 years

You don’t have to pay SDLT or tell HMRC if you buy a new or assigned lease of less than 7 years, as long as the chargeable consideration is less than the residential or non-residential SDLT threshold.

Chargeable consideration includes:

  • any premium and the net present value of any rent in the case of a new lease
  • the consideration given for the assignment or surrender of an existing lease

To work out the net present value (based on the average rent over the life of the lease) you can use the Stamp Taxes online calculator.

Alternative property finance

Sometimes the financial arrangements for a buying a property or land involve a secondary transaction with the lender. This follows on from the main transaction (eg when you follow Sharia law).

These later transactions may be exempt from SDLT where you meet specific conditions.