Stamp duty when you swap property or give property in exchange
Swapping property and stamp duty
A property exchange can create a stamp duty calculation for each person, even when little cash is paid.
- Value what each person receives
- Consider any cash top-up or gift
- Check leaseback arrangements carefully
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty when you swap property or give property in exchange
Stamp duty when you swap property or give property in exchange
If you swap homes, stamp duty can still apply even where little, or no, cash changes hands. Each person is usually treated as buying what they receive. The value of that property can set the taxable amount.
What this rule is about
Most people may assume that stamp duty land tax is based solely on money paid, even where a house, flat, lease or other land right forms part of the return. It is not always so. A house, flat, lease or other land right can itself be payment for another property.
So a swap is not one simple event. It can create a land transaction for both people. That can change everything.
The key question is: what did each person receive, and what was it worth? For a freehold or leasehold exchange, the law looks at the market value of the property received as well as the amount given.
What the official source says
HMRC’s manual explains that when people exchange homes, each person must calculate stamp duty separately, because each acquisition is treated as its own land transaction. That is the starting point. For an exchange involving a freehold or leasehold property, the taxable amount is the higher of the market value received and the amount that would otherwise count as payment.
- A grandmother gives her £1 million home to her grandson.
- In return, she receives his flat, worth £300,000.
- The grandson is taxed on £1 million because that is the value of the home he receives.
- If £700,000 of what she transfers is fairly treated as a gift, the grandmother is taxed on £300,000.
- Where one home is worth more, a cash top-up can form part of the exchange.
- Where payment covers both the property received and something else, such as a gift, it must be split fairly so the relevant amount can be identified. Context matters.
That fair split matters. HMRC says a genuine commercial deal is unlikely to contain a gift element. Family arrangements may be different.
What this means in practice
You cannot assume that low cash payment means low stamp duty when property is exchanged, because another property can itself be valuable consideration in the transaction. Value can control. Swapping a property for another property is still giving something of value. The market value of the property you get may be higher.
This is the part people get wrong: each side needs its own calculation. The answer for one person does not automatically decide the answer for the other.
- Get a sound value for each property at the relevant date.
- Record every cash payment, even a small balancing sum.
- Check whether any part of a family transfer is really a gift.
- Read the full deal, not just the main transfer document.
- Do not use the value of an unburdened freehold if leases restrict it.
HMRC also gives an example involving a developer. A company buys a block’s freehold for a nominal sum, but must immediately grant very long leases back to the developer. If those leases leave the freehold with only nominal value, HMRC says there may be no stamp duty for the company on that freehold.
That result is narrow. If the burdened freehold has more than nominal value, tax may arise.
How to analyse it
Start with the real arrangement. Labels such as “swap”, “gift” or “nominal sum” do not settle the issue. Look at what each person gives and gets.
- List every property, lease and land right transferred.
- Identify each person receiving a property or land right.
- Check whether the exchange includes a freehold or leasehold property.
- Find the market value of what each person receives.
- Add cash, debt and any other payment given for that property.
- Split the amount fairly if it also covers a gift or another matter.
- For a leaseback, check every condition for the statutory exemption.
A promise can matter too. Non-cash payment is normally valued at its market value at the effective date. That is usually the date that matters for the transaction.
Example
Ahmed’s home is worth £375,000. Katrina’s is worth £400,000. Ahmed gives Katrina £25,000 in cash and they swap homes.
Ahmed receives a home worth £400,000. His amount is £400,000. Katrina receives a home worth £375,000. Her amount is £375,000 after the £400,000 value of what she gave is fairly split between Ahmed’s home and the £25,000 cash she received.
The figures are not simply netted off. Each side is considered on its own.
Why this can be difficult in practice
Valuation often decides the result. This can be especially hard where a freehold is subject to long leases, restrictions or rights that reduce what it is worth.
Gifts cause another problem. A family may call a transfer an exchange, while the documents and values show that one person gave away part of the value. The law requires a just and reasonable split. It does not provide a fixed formula.
- A stated price may not show the real value of the full arrangement.
- A cash top-up does not remove the need to value both properties.
- A transfer between relatives may contain both payment and a gift.
- A lease granted back may qualify for exemption only if all conditions are met.
- HMRC’s examples explain its view, but they do not replace the legislation.
Key takeaways
- Swapping property can trigger stamp duty for both sides.
- The value of what you receive can be more important than cash paid.
- Gifts and lease restrictions can change the taxable amount.
Technical analysis
For advisers, and for anyone who wants to check the law behind this page. You do not need this section to understand the guidance above.
Legislation
- FA 2003 section 43 — when buying or creating land rights is a transaction
- FA 2003 section 117 — freehold and leasehold interests covered by exchange rule
- FA 2003 Schedule 4 para 1 — what counts as the amount given for land
- FA 2003 Schedule 4 para 4 — fairly splitting payment between property and other matters
- FA 2003 Schedule 4 para 5 — value rule for exchanges of major land interests
- FA 2003 Schedule 4 para 7 — valuing non-cash payments at the effective date
- FA 2003 section 57A — exemption conditions for qualifying sale and leaseback deals
Official guidance
The pages below are HMRC’s guidance. Guidance is not law. It sets out how HMRC reads the legislation, and it is not binding on you, on a tribunal or on a court. Where guidance and the legislation differ, the legislation wins. HMRC can also change or withdraw guidance, and it may not cover your facts.
Where this is not settled
- A fair split where a deal includes both a gift and an exchange is fact-sensitive.
- The value of a freehold burdened by leases may need valuation evidence. Its unburdened value is not necessarily the relevant value.
- The supplied statutory text is current only to 17 November 2025. A transaction after that date should be checked against current legislation.
Evidence you would need
This kind of case is decided on the facts of the individual property. These are the records that usually settle it, and the ones an adviser would ask you for.
- Independent valuations for each property or land right at the relevant date
- The transfer documents and any side agreements
- Details of cash, debt, leases and other promises in the deal
- Evidence showing whether part of the transfer was intended as a gift
- For a leaseback, the sale contract and the lease granted back
Explore this with an AI
Readers often want to test their own situation. Copy the prompt below into ChatGPT, Claude or Gemini. It hands the model the actual legislation for this page rather than letting it answer from memory, and tells it to be explicit about what is uncertain. What comes back is information, not advice – check it against the links above.
I am researching UK Stamp Duty Land Tax (SDLT), which applies in England and Northern Ireland. MY QUESTION Stamp duty when you swap property or give property in exchange [Replace this with your own situation: what you are buying, the price, the dates, who the buyer is, and what you plan to do with the property.] THE LAW THIS TURNS ON - FA 2003 section 43 - when buying or creating land rights is a transaction https://www.legislation.gov.uk/ukpga/2003/14/section/43/2025-11-17 - FA 2003 section 117 - freehold and leasehold interests covered by exchange rule https://www.legislation.gov.uk/ukpga/2003/14/section/117/2025-11-17 - FA 2003 Schedule 4 para 1 - what counts as the amount given for land https://www.legislation.gov.uk/ukpga/2003/14/schedule/4/paragraph/1/2025-11-17 - FA 2003 Schedule 4 para 4 - fairly splitting payment between property and other matters https://www.legislation.gov.uk/ukpga/2003/14/schedule/4/paragraph/4/2025-11-17 - FA 2003 Schedule 4 para 5 - value rule for exchanges of major land interests https://www.legislation.gov.uk/ukpga/2003/14/schedule/4/paragraph/5/2025-11-17 - FA 2003 Schedule 4 para 7 - valuing non-cash payments at the effective date https://www.legislation.gov.uk/ukpga/2003/14/schedule/4/paragraph/7/2025-11-17 - FA 2003 section 57A - exemption conditions for qualifying sale and leaseback deals https://www.legislation.gov.uk/ukpga/2003/14/section/57A/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm04020a HOW I WANT YOU TO ANSWER 1. Work from the legislation above. Read it before answering. Guidance from HMRC is its view of the law, not the law, and does not bind a tribunal or a court. 2. Tell me what the rule actually requires, in plain English. 3. Tell me which facts decide the answer, and which facts would change it. 4. Tell me what evidence I would need to support the position. 5. Be explicit about anything unsettled or fact-sensitive. Do not guess. 6. Your training data has a cutoff and SDLT rates and reliefs change at fiscal events. Say so if you are not sure the law is current. POINTS ALREADY KNOWN TO BE UNCERTAIN ON THIS TOPIC - A fair split where a deal includes both a gift and an exchange is fact-sensitive. - The value of a freehold burdened by leases may need valuation evidence. Its unburdened value is not necessarily the relevant value. - The supplied statutory text is current only to 17 November 2025. A transaction after that date should be checked against current legislation. Do not give me a conclusion you cannot support from the provisions above.
Legislation links show Finance Act 2003 as it stood on 2025-11-17. The law may have changed since, and the rules that apply are those in force on the date of your transaction. The official guidance this page is based on is here.
This page was last updated on 1 September 2026
Useful article? You may find it helpful to read the original guidance here: Stamp duty when you swap property or give property in exchange
Search Land Tax Advice with Google
