Stamp Duty Land Tax (SDLT) is payable to HMRC on a transfer of equity when there is "consideration." Consideration means something of value changing hands, such as money, or taking on a debt (like a mortgage). SDLT must be paid and filed within 14 days of completion, otherwise, you may face late payment penalties, interest charges, or legal action from HMRC.

If you transfer equity and receive consideration in return, you'll likely need to pay Stamp Duty Land Tax (SDLT). However, equity transfers between spouses or civil partners are often exempt from SDLT only if no money or other consideration changes hands. Additionally, if the transfer is made as part of a divorce or separation through a court order, SDLT won't be payable.

transfeThere are also other taxes to be aware of in a transfer of equity, such as Capital Gains Tax (CGT) and income tax.

Stamp Duty on a Transfer of Equity

Stamp Duty Land Tax (SDLT) applies to any transaction where land or property is transferred between parties for consideration. This includes transfers of equity.

A transfer of equity essentially changes who owns a share of a property. It can happen for various reasons, such as adding or removing someone from the property's title, a change in ownership percentages, or as part of a financial settlement.

The crucial factor for SDLT is "consideration." Consideration means something of value being exchanged. This can be money, but it can also be the assumption of a debt, like taking over a portion of an existing mortgage.

If there is consideration involved in the transfer of equity, then SDLT may be payable. Importantly, the amount of SDLT is calculated based on the amount of consideration given, not the overall market value of the property. For example, if you transfer a 50% share of a property and receive £50,000 in return, the SDLT will be calculated on the £50,000, not the full value of the property.

While the SDLT is calculated on the consideration given, it's crucial to be aware that HMRC has measures in place to prevent undervaluation. If HMRC believes that a property has been deliberately undervalued to avoid paying the correct amount of SDLT, it can investigate and impose penalties.

They may also require the parties to pay the additional tax owed, plus interest. It's essential to be accurate and honest in declaring the amount of consideration given in a transfer of equity. Attempting to avoid paying the correct SDLT through undervaluation is not only unethical but also carries significant risks legally and financially.

Stamp Duty Land Tax (SDLT) rates

The rate of stamp duty payable differs for properties in England and those in Wales (LTT).

The following table shows the current SDLT rates for England. SDLT is calculated on a tiered basis, meaning different portions of the consideration are taxed at different rates. You only pay the higher rate on the portion of the consideration that falls within that band.

For example, if the consideration is £300,000, you won't pay the 5% rate on the entire amount; only the portion between £250,001 and £925,000 will be taxed at 5%.

When buying someone out of jointly owned property, you need to factor in the stamp duty the purchase attracts as part of the settlement.

Transfer of Equity Stamp Duty Calculator

Use our free online calculator to estimate the stamp duty payable on your transfer of equity. Simply enter the relevant details, such as the amount of consideration and the location of the property (England or Wales), and the calculator will provide an estimate of the SDLT/LTT due.

Please note that this is an estimate only, and it's always best to consult with a conveyancing solicitor for accurate calculations and personalised advice.

What is chargeable consideration?

Chargeable consideration is the value on which Stamp Duty Land Tax (SDLT) is calculated in a transfer of equity. It's defined in the Finance Act 2003.

Consideration can be:

• Money: This is the most straightforward form of consideration. If one party pays the other for a share of the property, that payment is considered consideration. For example, if you transfer 50% of your property to your sibling for £50,000, the £50,000 is the consideration.
• Debt Assumption: If one party takes on a share of an existing mortgage or loan secured against the property, this is also a consideration. For example, if you transfer 50% of your property and the other party takes over 50% of the existing mortgage, that assumed debt is part of the consideration.

To calculate the total consideration, add up any money paid and the amount of any debt assumed by the new owner. If this total exceeds the SDLT threshold, stamp duty is payable. Remember, it's the consideration that matters, not the overall market value of the property.

What if there's no consideration? If the transfer of equity is a genuine gift (i.e., no money or debt is exchanged), then SDLT is generally not payable. However, it's always advisable to seek legal advice to confirm the specific circumstances of the transfer and ensure there are no unforeseen tax implications.

Any stamp duty land tax due must be declared and paid to HMRC within 14 days of the transaction's completion. Failure to do so can result in penalties.

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SDLT Transfer of Equity example

Let's illustrate how SDLT is calculated with a real-world example. Imagine Ian and Jane, a married couple in England, own a property valued at £300,000 with a £275,000 existing mortgage. They decide to transfer 99% beneficial interest in the property to Jane, with Ian retaining 1%. Jane doesn't pay Ian any money for her share.

Here's how the SDLT calculation works:

Determine the Consideration

Since Jane is taking on 99% of the existing mortgage debt, this is the consideration. 99% of £275,000 is £272,250. As they're married, there is no second home stamp duty payable. However, there will be a standard rate payable.

Apply the SDLT Rates

We apply the relevant SDLT rates to the consideration amount:

• 0% on the first £125,000 = £0
• 2% on the portion from £125,001 to £250,000 = £2,500
• 5% on the portion from £250,001 to £272,250 = £1,112.50
• Total SDLT: £0 + £2,500 + £1,112.50 = £3,612.50

Important Note: This calculation uses the SDLT rates in effect from the 1st of April 2025.

Do you pay any other tax on a Transfer of Equity?

Stamp Duty Land Tax (SDLT) is the primary tax consideration in a transfer of equity, but you should consider Capital Gains Tax (CGT) and, in some cases, Income Tax.

Capital Gains Tax

Capital Gains Tax (CGT) may be payable if you transfer equity on a property that is not your Principal Private Residence (PPR)—in other words, if it's a rental property or a second home. CGT isn't payable on a transfer to your spouse or civil partner, though.

CGT is levied on any profit (or "gain") you make on the portion of the property's equity that you're transferring. It's calculated based on the difference between the price you originally paid for that share of the property and the amount you receive for it in the transfer of equity.

Example: You bought a property for £200,000 and are now transferring 50% of the equity for £150,000. Your original cost basis for the 50% share was £100,000. Your capital gain is £150,000 - £100,000 = £50,000. You'll then need to calculate the CGT due on this £50,000 gain, considering any available allowances or reliefs.

Only the gain exceeding your annual allowance of £3,000 is subject to tax, so you can make a certain amount on the gain before having to pay Capital Gains Tax.

You can use our Capital Gains Tax Calculator to estimate your CGT liability on a transfer of equity.

If the amount paid for the equity is less than the market value, you need to use the market value instead of the actual price paid when calculating the gain or loss. This is to prevent people from artificially reducing their CGT liability by transferring equity at below-market prices.

So, if you transfer equity to a connected person (like a family member) for less than its true market value, HMRC will likely consider the market value when calculating CGT.

What is the CGT rate?

Any capital gains tax should be declared and paid to HMRC within 14 days after completion of the transaction. Otherwise, you may incur penalties. You can file your tax return with HMRC by clicking here - Self Assessment: Capital Gains Summary SA108 Form.

Income Tax

The income tax on a buy-to-let is shared in the proportions agreed within the TR1 Form (transfer form) when you transfer the equity.

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