Trusts and stamp duty: bare trusts, settlements and powers
Trusts and SDLT
The SDLT result can depend on whether land is held in a bare trust or a settlement.
- Check the trust documents.
- Do not rely only on the title register.
- Consider any power or trustee discretion.
Scroll down for the full analysis.
Read the original guidance here:
Trusts and stamp duty: bare trusts, settlements and powers
When land is held in a trust, stamp duty land tax can depend on the type of trust involved. The first question is straightforward: is this a bare trust or a settlement? That classification can change whose position matters.
What this rule is about
A trust separates the person holding land from the person who may benefit from it. This can make a property deal appear confusing. For SDLT, the law uses two main groups to address that problem.
The groups are bare trusts, including nominee arrangements, and settlements. A settlement is a trust that is not a bare trust.
What the official source says
HMRC’s manual points to section 105 and Schedule 16 of the Finance Act 2003, explaining that trustees’ and beneficiaries’ SDLT responsibilities depend on the type of trust holding the land. That classification matters.
- A bare trust may arise where a person is entitled to the property as against the trustee.
- A person holding land only as someone else’s nominee is included in a bare trust.
- Two people can be jointly entitled under a bare trust.
- Any trust that is not a bare trust is a settlement for SDLT.
- Schedule 16 also covers land passing under a power of appointment.
- It also covers land passing under a discretion held by settlement trustees.
What this means in practice
You should not assume that the name on the title register provides the complete SDLT answer. A trustee may hold legal title while another person has the right to instruct the trustee what to do with the land.
The distinction may sound technical. It can affect how the SDLT rules apply to a purchase, lease, or later transfer.
- Read the trust deed, not just the title register.
- Check whether one person has an absolute right to the land.
- Check whether the trustee can make choices between possible beneficiaries.
- Keep documents showing who paid and why.
How to analyse it
Start with the trust terms, and do not assume before examining the rights that every trust is a settlement or that each nominee arrangement operates in the same way. Check the documents.
- Identify the land and the transaction taking place.
- Find the trust deed and any amendments.
- Ask who has the right to direct the trustee.
- Decide whether that person is absolutely entitled to the land.
- If not, consider whether the trust is a settlement.
- Check whether a power of appointment or trustee discretion is being used.
- Identify any payment linked to a person becoming eligible under that power.
Example
Amir holds a flat in his name, but only as nominee for Beth. Beth can require Amir to transfer or deal with the flat as she directs. This points towards a bare trust. If the trust instead lets trustees choose whether Beth, her children, or another person receives the flat, it points towards a settlement.
Why this can be difficult in practice
Although people often use the word “trust” as though it resolves the issue, it does not; the rights created by the documents matter more than a label used by the family, agent, or conveyancer. Labels alone do not decide it.
A power can create another issue. Schedule 16 says that, where land passes under a power or trustee discretion, a payment made for someone to become an eligible person can count as the amount paid for that interest.
- A nominee letter may not show every right that exists.
- Family arrangements may have changed without clear paperwork.
- A payment may be linked to eligibility, rather than to the later transfer alone.
- Trust law outside England and Wales can need separate care.
Key takeaways
- For SDLT, classify the trust before analysing the deal.
- Bare trusts include nominee arrangements.
- A settlement is a trust that is not bare.
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 105 — applies the trust rules in Schedule 16
- FA 2003 Schedule 16 para 1 — defines bare trusts and other settlements
- FA 2003 Schedule 16 para 7 — treats some payments as consideration on appointments
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
- The correct category can depend on the wording of the trust deed and on who can direct what happens to the land.
- The bundled legislation is current only to 17 November 2025. Current law must be checked for a transaction after that date.
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 trust deed and any later changes to it.
- Details of who has rights to the land and who can direct the trustees.
- The document that appoints, transfers or grants rights over the land.
- Details of any payment connected with becoming eligible under a power or discretion.
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 Trusts and stamp duty: bare trusts, settlements and powers [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 105 - applies the trust rules in Schedule 16 https://www.legislation.gov.uk/ukpga/2003/14/section/105/2025-11-17 - FA 2003 Schedule 16 para 1 - defines bare trusts and other settlements https://www.legislation.gov.uk/ukpga/2003/14/schedule/16/paragraph/1/2025-11-17 - FA 2003 Schedule 16 para 7 - treats some payments as consideration on appointments https://www.legislation.gov.uk/ukpga/2003/14/schedule/16/paragraph/7/2025-11-17 HMRC's guidance page on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm31700 HOW I WANT YOU TO ANSWER 1. Work from the legislation above. Read it before answering. HMRC guidance is HMRC's 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 - The correct category can depend on the wording of the trust deed and on who can direct what happens to the land. - The bundled legislation is current only to 17 November 2025. Current law must be checked for a transaction after that date. 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: Trusts and stamp duty: bare trusts, settlements and powers
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