Stamp duty when a nil-rate band trust is settled with land
SDLT and nil-rate band trusts
A home transferred under a will is often exempt from SDLT. The result can change where the person receiving it promises to pay a trust legacy, takes on a payment duty, or gives a new charge over the property.
- Cash paid to trustees does not itself create an SDLT issue on land.
- HMRC says non-cash promises and charges can count as value given.
- Check the will, trust papers, transfer and any debt documents together.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty when a nil-rate band trust is settled with land
When an estate uses a home or other land to settle a nil-rate band trust, it can trigger stamp duty land tax. The key question is simple: does the person receiving the land give money, make a promise, or take on a debt in return? If they do, SDLT may arise even though the transfer follows a death.
What this rule is about
A will often creates a nil-rate band discretionary trust. It commonly gives trustees a fixed cash legacy, up to the inheritance tax nil-rate band, for a group of possible beneficiaries.
The rest of the estate may pass to a surviving spouse or civil partner. That often includes the family home. The estate can settle the trust’s cash legacy by paying cash to its trustees. In that simple case, the estate transfers no land to settle the legacy.
Problems can start when the estate uses land instead. A transfer of land can be a land transaction for SDLT. This remains so even if the transfer comes from a will and no sale takes place.
Most people assume an inheritance can never involve stamp duty. Usually, that is right. But a payment promise or a charge over the home can change the answer.
What the official source says
The legislation normally exempts someone who receives property in or towards satisfaction of their entitlement under a will. The exemption does not apply if they give something in return, apart from taking on debt that was already secured on the property immediately after the death.
The legal phrase is “chargeable consideration”. It means the money or other value given to get the land. It is wider than the cash price.
- Paying the stated cash legacy to the trustees does not itself create an SDLT issue.
- HMRC says a surviving spouse’s promise to pay the trust legacy can count as value given for land transferred to them.
- HMRC also says it can count where the personal representatives promise to pay and the spouse takes responsibility for that promise.
- For that second situation, HMRC says the amount is the sum promised, subject to a cap at the land’s market value.
- HMRC says a new charge over the property, accepted by the trustees instead of cash, is value given for the transfer.
- Its manual reaches a different result where a charge secures a debt, nobody’s rights or liabilities for that secured debt change, and no fresh obligation is created.
That last distinction matters. A debt secured on land does not necessarily receive the same treatment as a new promise to pay it. The documents and timing matter.
What this means in practice
If the family home passes to the surviving spouse without any payment or new obligation, the will exemption will usually be the starting point. The position can differ if an arrangement uses land, rather than cash, to settle the trust’s cash legacy.
Do not focus only on who gets the home. Look at what they agree to give or do in return.
- Check whether cash was paid to the trust trustees.
- Check whether the surviving spouse signed a promise to pay the legacy.
- Check whether they accepted responsibility for someone else’s promise.
- Check whether the home was charged to secure payment of the legacy.
- Check whether the charge secured a debt already on the home at death.
- Check whether anyone’s rights or responsibilities for that debt changed.
This is often misunderstood: a document’s legal effect determines the SDLT position, not calling it a “family arrangement”. That effect is decisive.
How to analyse it
Start with the steps, not the label given to the trust. Put the will, trust papers and transfer side by side. Then follow the money and obligations that each document creates.
- Identify the land being transferred and the person receiving it.
- Identify the cash legacy due to the nil-rate band trust.
- Ask whether the land transfer satisfies all or part of that legacy.
- Ask what the person receiving the land gives in return.
- Separate a cash payment from a promise, assumed debt or property charge.
- Work out whether the debt was secured on that property immediately after death.
- Compare each person’s rights and liabilities before and after the transfer.
- Value the land if the amount promised could be higher than its market value.
A later deed changing the will needs a separate check. It may itself alter beneficial ownership of land. A deed of variation can be exempt if it is completed within two years after death and no money or other value is given, other than changing another disposition.
Example
Priya’s will leaves a £325,000 cash legacy to a discretionary trust. Her home passes to her civil partner, Mark. Instead of paying £325,000 in cash to the trustees, Mark promises them that he will pay £325,000. In return, the personal representatives transfer the home to Mark.
HMRC’s manual says Mark’s promise is value given for the home. It may therefore create an SDLT charge. If the home is worth £300,000, the legislation’s debt rule can limit the amount counted to £300,000.
Change one fact. If the estate pays the £325,000 cash legacy to the trustees and then transfers the home to Mark under the will, the cash payment itself does not create an SDLT issue on the land transfer.
Why this can be difficult in practice
These arrangements often use several documents prepared at different times. One may describe a charge as security only. Another may give the person receiving the home a fresh duty to pay the trustees. The second document can be decisive.
HMRC’s examples are useful, but they are HMRC’s view rather than the law itself. The legislation remains the starting point.
- A charge over land is not, by itself, a transfer of land.
- A charge may still be value given where it settles a cash legacy.
- Taking on a secured debt can be treated differently from assuming an unsecured promise.
- The exemption for inherited property can fail if any other value is given.
- A deed of variation has its own conditions and time limit.
- This SDLT analysis does not decide whether trustees had power to enter the arrangement.
The supplied statutory text is current only to 17 November 2025. Where the transfer occurred after that date, check the legislation then in force before relying on this analysis.
Key takeaways
- Inheritance does not always mean there is no SDLT.
- A promise to pay or a new property charge can matter.
- The exact wording of the will and related documents decides the result.
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 42 — the charge to stamp duty land tax
- FA 2003 section 43 — when a transfer counts as a land transaction
- FA 2003 section 48 — land interests that can be subject to SDLT
- FA 2003 section 50 — schedule governing amounts given for land
- FA 2003 Schedule 3 para 3A — will inheritances and the secured-debt exception
- FA 2003 Schedule 3 para 4 — exemption for qualifying will variations
- FA 2003 Schedule 4 para 1 — money or value given for land
- FA 2003 Schedule 4 para 7 — valuing non-cash amounts given for land
- FA 2003 Schedule 4 para 8 — debt taken on as payment for land
- FA 2003 Schedule 4 para 8A — secured debt excluded after inheritance exemption fails
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
- Whether a particular document creates a new personal payment obligation, changes liability for a debt, or merely leaves existing rights unchanged depends on its wording and legal effect.
- The supplied statutory text is current only to 17 November 2025. Current legislation and the rules applying on the transaction date should be checked for a later transaction.
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.
- The will and any codicils.
- The trust terms and the amount of the pecuniary legacy.
- The personal representatives’ assent or transfer.
- Any promise, indemnity, loan, charge or agreement linked to the transfer.
- Evidence of who owed the debt before and after the transfer.
- A valuation of the land where the promised amount may exceed its value.
- Any deed of variation and its date.
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 a nil-rate band trust is settled with land [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 42 - the charge to stamp duty land tax https://www.legislation.gov.uk/ukpga/2003/14/section/42/2025-11-17 - FA 2003 section 43 - when a transfer counts as a land transaction https://www.legislation.gov.uk/ukpga/2003/14/section/43/2025-11-17 - FA 2003 section 48 - land interests that can be subject to SDLT https://www.legislation.gov.uk/ukpga/2003/14/section/48/2025-11-17 - FA 2003 section 50 - schedule governing amounts given for land https://www.legislation.gov.uk/ukpga/2003/14/section/50/2025-11-17 - FA 2003 Schedule 3 para 3A - will inheritances and the secured-debt exception https://www.legislation.gov.uk/ukpga/2003/14/schedule/3/paragraph/3A/2025-11-17 - FA 2003 Schedule 3 para 4 - exemption for qualifying will variations https://www.legislation.gov.uk/ukpga/2003/14/schedule/3/paragraph/4/2025-11-17 - FA 2003 Schedule 4 para 1 - money or value given for land https://www.legislation.gov.uk/ukpga/2003/14/schedule/4/paragraph/1/2025-11-17 - FA 2003 Schedule 4 para 7 - valuing non-cash amounts given for land https://www.legislation.gov.uk/ukpga/2003/14/schedule/4/paragraph/7/2025-11-17 - FA 2003 Schedule 4 para 8 - debt taken on as payment for land https://www.legislation.gov.uk/ukpga/2003/14/schedule/4/paragraph/8/2025-11-17 - FA 2003 Schedule 4 para 8A - secured debt excluded after inheritance exemption fails https://www.legislation.gov.uk/ukpga/2003/14/schedule/4/paragraph/8A/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/sdltm04045 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 - Whether a particular document creates a new personal payment obligation, changes liability for a debt, or merely leaves existing rights unchanged depends on its wording and legal effect. - The supplied statutory text is current only to 17 November 2025. Current legislation and the rules applying on the transaction date should be checked for a later transaction. 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 31 August 2026
Useful article? You may find it helpful to read the original guidance here: Stamp duty when a nil-rate band trust is settled with land
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