Stamp duty when a trust buys land: settlements and trustees
Trusts and stamp duty
For SDLT, most non-bare trusts are settlements. Where a settlement buys land, its trustees are treated as the buyers and may be responsible for SDLT obligations.
- Check the actual rights in the trust deed.
- Identify trustees at the effective date.
- Examine payments linked to trustee powers.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty when a trust buys land: settlements and trustees
Stamp duty may apply where a trust purchases land in England or Northern Ireland. The central question is whether the trust is a settlement rather than a bare trust. Where it is a settlement, SDLT regards the trustees as the buyers.
What this rule is about
Trusts divide legal ownership from the benefits of property. That division can make a land purchase more complicated. For SDLT purposes, the law places trusts into two broad categories: bare trusts and settlements.
A settlement is any trust that is not a bare trust. Broadly, a bare trust is one in which the beneficiary has the exclusive right to the property and can direct what happens to it.
Land held as a nominee for another person can also amount to a bare trust.
The distinction is important. SDLT rules operate differently for a bare trustee and for trustees of a settlement.
What the official source says
HMRC’s manual states that most arrangements are settlements. Bare trusts are the exception.
The manual provides common examples. Neither labels nor descriptions replace the deed or the law.
- An interest in possession trust gives a named beneficiary the right to trust income as it arises, whether that income is paid directly or through the trustees. The right is fixed.
- That person may receive income for life, while someone else receives the trust capital later.
- In a discretionary trust, trustees decide, under the trust terms and as circumstances require, whether, when and how much income or capital to give beneficiaries. The outcome is not fixed.
- A discretionary beneficiary usually has no fixed right to trust income or capital.
- Accumulation and maintenance trusts and mixed trusts can also be settlements.
- A trust governed by overseas law may also be a settlement for SDLT.
The legislation also addresses trusts governed by Scottish or overseas law specifically.
If the arrangement would give a beneficiary an equitable interest under English law, SDLT treats them as having that interest even where local law uses a different approach. That treatment applies.
What this means in practice
For SDLT purposes, trustees of a settlement are buyers. They acquire the whole land interest.
This includes beneficial ownership, rather than only the name shown at the Land Registry.
Trustee names therefore matter from the outset. They are not simply messengers for those who may benefit from the trust.
- The trustees at the transaction’s effective date are responsible trustees.
- Anyone who later becomes a trustee is also a responsible trustee.
- SDLT, interest on unpaid SDLT, and some repayments claimed back by HMRC may be recovered from one or more responsible trustees.
- HMRC may recover an amount only once, not separately in full from every trustee.
- A person who becomes trustee later is protected from a penalty caused before the relevant time.
- One or more responsible trustees may make the SDLT return.
- All trustees making that return must make the required declaration.
This is the practical point that people often miss. Changing trustees does not remove the need to check, before deciding who is responsible, which individuals were in office when the land was bought. Dates matter.
How to analyse it
Start with the trust’s real terms rather than its title. Labels such as family, life interest and discretionary trust can offer guidance.
They may point strongly towards an answer. However, the rights and powers in the document are what matter.
- Read the trust deed and any later changes to it.
- Ask whether one person is absolutely entitled to the land against the trustee.
- Check, by reference to the trust deed, any later changes, and the rights existing at the relevant time, whether that person can require the trustee to transfer or deal with the land as directed. The answer matters.
- If not, consider whether the trust is a settlement for SDLT.
- Identify every trustee on the effective date of the land purchase.
- Record later appointments and retirements of trustees.
- Check whether the purchase must be reported under the normal SDLT rules.
- List every payment or other benefit connected with an appointment from the trust.
- Check why each payment was made and who received the land interest.
Trustee powers are subject to a separate rule. A person may receive a land interest because trustees exercise a power of appointment or discretion. Certain payments may then count as the amount paid for that interest.
The statute sets this out precisely. It catches payment for becoming an object. Both powers and discretion are covered.
HMRC’s manual describes this as payment given to trustees in return for using their power. The documents and the real reason for the payment therefore matter.
Example
Amira and Daniel act as trustees of a discretionary family trust. The trust purchases a small commercial property for £350,000.
No possible beneficiary has a fixed right to the property or to its income. Those facts indicate a settlement rather than a bare trust.
SDLT treats Amira and Daniel as the buyers.
Later, the trustees exercise a power to transfer the property to Leo. The arrangement includes £20,000 paid so that Leo becomes eligible under that power.
That £20,000 may be treated as an amount paid for the interest Leo receives.
The example does not calculate SDLT. Wider rules and the transfer facts determine the tax result.
Why this can be difficult in practice
You may think that the word “trustee” supplies the answer. It does not. A bare trustee and a trustee of a settlement may receive very different SDLT treatment.
Where trust papers are old, amended or incomplete, and family arrangements have changed without a clear written record, it can be harder to show who held which rights when the land transaction took place. The evidence may be unclear.
- A beneficiary receiving income does not automatically mean they own the trust capital.
- A beneficiary named in a discretionary trust does not usually have a fixed right to payment.
- Calling an arrangement a nominee arrangement does not prove it is a bare trust.
- An overseas-law trust needs careful comparison with the SDLT statutory test.
- Money paid around a trustee appointment may have more than one purpose.
- A new trustee’s protection is limited to penalties arising before the relevant time.
Key takeaways
- A settlement is any trust that is not a bare trust.
- Trustees of a settlement are treated as the buyers when the trust buys land.
- Trust documents, trustee dates and the reason for payments can decide the SDLT 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 105 — applies the trust rules in schedule 16
- FA 2003 Schedule 16 para 1 — defines settlements and bare trusts for SDLT
- FA 2003 Schedule 16 para 2 — recognises certain overseas and Scottish trust interests
- FA 2003 Schedule 16 para 4 — treats settlement trustees as buying the whole interest
- FA 2003 Schedule 16 para 5 — makes responsible trustees answerable for tax and penalties
- FA 2003 Schedule 16 para 6 — sets rules for trustee returns enquiries and appeals
- FA 2003 Schedule 16 para 7 — treats certain payments for appointments as purchase payments
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
- Trust deeds can use labels that do not settle the SDLT result. The rights that beneficiaries and trustees actually have matter.
- An overseas trust must be compared with the statutory test, rather than assumed to have the same result as an English trust.
- It may be unclear whether a payment was made for someone becoming eligible under a power, or for another reason.
- The source materials are not a verified statement of law for transactions after 17 November 2025.
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 signed trust deed and any later deeds or letters of wishes
- The names of trustees on the transaction’s effective date
- The contract, transfer and completion statement
- Records showing who paid money and why
- Documents showing any appointment or exercise of trustee discretion
- Details of the trust’s governing law where it is not English law
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 trust buys land: settlements and trustees [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 settlements and bare trusts for SDLT https://www.legislation.gov.uk/ukpga/2003/14/schedule/16/paragraph/1/2025-11-17 - FA 2003 Schedule 16 para 2 - recognises certain overseas and Scottish trust interests https://www.legislation.gov.uk/ukpga/2003/14/schedule/16/paragraph/2/2025-11-17 - FA 2003 Schedule 16 para 4 - treats settlement trustees as buying the whole interest https://www.legislation.gov.uk/ukpga/2003/14/schedule/16/paragraph/4/2025-11-17 - FA 2003 Schedule 16 para 5 - makes responsible trustees answerable for tax and penalties https://www.legislation.gov.uk/ukpga/2003/14/schedule/16/paragraph/5/2025-11-17 - FA 2003 Schedule 16 para 6 - sets rules for trustee returns enquiries and appeals https://www.legislation.gov.uk/ukpga/2003/14/schedule/16/paragraph/6/2025-11-17 - FA 2003 Schedule 16 para 7 - treats certain payments for appointments as purchase payments https://www.legislation.gov.uk/ukpga/2003/14/schedule/16/paragraph/7/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm31720 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 - Trust deeds can use labels that do not settle the SDLT result. The rights that beneficiaries and trustees actually have matter. - An overseas trust must be compared with the statutory test, rather than assumed to have the same result as an English trust. - It may be unclear whether a payment was made for someone becoming eligible under a power, or for another reason. 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 a trust buys land: settlements and trustees
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