Guide to Property Transactions Exempt from Stamp Duty Land Tax

When an SDLT Return Is Not Needed

Some land and property transactions in England and Northern Ireland do not need an SDLT return because they are exempt or fall below HMRC’s reporting limits. The key issue is whether there is any chargeable consideration, which can include not just cash but also taking on a mortgage or other debt.

• No SDLT return is usually needed where there is no chargeable consideration, such as a genuine gift with no mortgage or other value given in return.
• Property inherited under a will is generally exempt, and transfers between separating spouses or civil partners are also exempt if made under an agreement or court order.
• Low-value freehold transactions do not need a return if the total chargeable consideration is under £40,000, unless linked transactions take the total higher.
• Leasehold transactions have separate rules based on the lease term, premium, rent, and whether the lease is new, assigned, or surrendered.
• For new leases, chargeable consideration includes both any premium and the net present value of the rent, so rent must not be overlooked.
• SDLT does not apply to transactions in Scotland from 1 April 2015 or in Wales from 1 April 2018, where different property taxes apply instead.

Scroll down for the full analysis.

SDLT transactions that do not need a return

This page explains when a land or property transaction is outside the normal SDLT return process. The key point is that some transactions are exempt from SDLT, and some low-value transactions do not need to be notified to HMRC at all. That matters because, in those cases, there may be no tax to pay and no SDLT return to file.

What this rule is about

SDLT normally applies to land transactions in England and Northern Ireland. But not every transfer of land triggers a filing obligation. HMRC’s guidance identifies several categories where either:

• the transaction is exempt from SDLT, or
• the transaction falls below the level at which HMRC needs to be told about it.

The distinction matters. A transaction can be exempt because the law treats it as not chargeable. Separately, some transactions are simply too small or too limited to require a return. You should not assume that every transfer of legal title needs SDLT reporting.

The guidance also makes clear that SDLT does not apply to transactions in Scotland from 1 April 2015 or in Wales from 1 April 2018. Those transactions fall instead under LBTT in Scotland or LTT in Wales.

What the official source says

According to HMRC’s guidance, you do not need to tell HMRC about certain transactions, including these:

• transfers where there is no chargeable consideration
• property passing under a will
• transfers connected with divorce, separation, or the end of a civil partnership
• some low-value freehold transactions
• some leasehold transactions, depending on the term, premium, rent, and total consideration

For transfers with no chargeable consideration, the guidance says there is no SDLT and no return. Chargeable consideration is wider than cash. It can include goods, services, release from a debt, or the transfer of a debt. HMRC specifically says this includes the value of any outstanding mortgage.

Property left by will is described as almost always exempt, even if there is debt secured on the property, such as a mortgage. The same treatment can apply where the terms of a will are changed within two years of death, provided a different beneficiary receives the property and the new beneficiary does not give compensation, including by taking over a mortgage.

Transfers on divorce, separation, or dissolution of a civil partnership are exempt where the couple agree to divide property between themselves or do so under a court order.

For freehold transactions, HMRC says no SDLT return is needed if the total chargeable consideration is less than £40,000, unless linked transactions push the total consideration higher.

For leasehold transactions, the rules depend on the lease term:

• For a new or assigned lease of 7 years or more, no return is needed if the premium is less than £40,000 and the annual rent is less than £1,000.
• For the assignment or surrender of a residential or non-residential lease granted for 7 years or more, no return is needed if the chargeable consideration is less than £40,000.
• For a new or assigned lease of less than 7 years, no return is needed if the chargeable consideration is below the relevant residential or non-residential SDLT threshold.

For a new lease, chargeable consideration includes both any premium and the net present value of the rent. For an assignment or surrender of an existing lease, it includes the consideration given for that assignment or surrender.

The guidance also notes that some secondary transactions under alternative property finance arrangements may be exempt if specific conditions are met.

What this means in practice

The first practical question is not “Has ownership changed?” but “Is there chargeable consideration, and if so, how much?” SDLT is not just about cash paid on completion. If the transferee takes property subject to a mortgage, or gives something else of value, that may count as chargeable consideration even if no money changes hands directly.

This is especially important in family transfers. A gift of property can be outside SDLT if it is a true gift with no consideration. But if the recipient takes over responsibility for a mortgage, HMRC’s guidance treats that mortgage debt as part of the consideration. That can change the SDLT result and the filing position.

Wills are treated differently. HMRC says property inherited under a will is almost always exempt, including where there is an outstanding mortgage. That is a specific rule for inheritance and should not be confused with ordinary lifetime gifts.

On divorce or civil partnership breakdown, transfers made as part of dividing property are treated favourably. If the transfer is part of an agreed split or carried out under a court order, HMRC says it is exempt. In practice, the connection with the separation arrangements matters.

For low-value transactions, the filing obligation can disappear even if the transaction is not exempt in a broader sense. A freehold purchase for less than £40,000 will not need to be notified unless linked transactions must be aggregated. Linked transactions are important because several connected purchases can be treated together when testing the threshold.

Leasehold transactions need more care. The filing result depends not just on the premium but also on rent, lease length, and whether this is a new lease, an assignment, or a surrender. A transaction that looks low-value on the premium alone may still need analysis because of the rent element.

How to analyse it

A sensible way to approach the issue is to work through these questions in order:

1. Is the property in England or Northern Ireland? If not, SDLT may not be the relevant tax.
2. Is the transaction one that HMRC identifies as exempt, such as inheritance under a will or a qualifying transfer on divorce or dissolution?
3. Is there any chargeable consideration at all? Do not look only for cash. Check for debt assumption, mortgage takeover, services, goods, or any other value given.
4. If it is a freehold transaction, is the total chargeable consideration less than £40,000?
5. Are there linked transactions that must be added together when testing that £40,000 figure?
6. If it is leasehold, is the lease term 7 years or more, or less than 7 years?
7. For a lease of 7 years or more, what are the premium and annual rent?
8. For a new lease, have you included the net present value of the rent as part of chargeable consideration?
9. For an assignment or surrender, what consideration is being given for that transaction?
10. If the arrangement involves alternative property finance, is the transaction a later secondary transaction that may qualify for a specific exemption?

This framework helps separate three different issues that are often confused: whether SDLT applies at all, whether a return is required, and whether multiple transactions must be looked at together.

Example

Illustration 1: A parent transfers a house to an adult child as an outright gift. There is no mortgage and the child gives nothing in return. On HMRC’s guidance, there is no chargeable consideration, so there is no SDLT and no return.

Illustration 2: The same transfer takes place, but the child takes over an outstanding mortgage. HMRC’s guidance says chargeable consideration includes the transfer of debt, including the value of an outstanding mortgage. That means the transfer is no longer a pure no-consideration gift. The SDLT position would then depend on the amount of that consideration and any applicable thresholds or rules.

Illustration 3: A beneficiary receives a mortgaged property under a will. HMRC says property left in a will is almost always exempt, and that includes property with outstanding debt on it. So this is treated differently from a lifetime gift with mortgage assumption.

Why this can be difficult in practice

The main difficulty is that “no money changes hands” does not necessarily mean “no chargeable consideration”. Mortgage debt is the most common trap. People often describe a transfer as a gift when, for SDLT purposes, there is consideration because a debt is being taken on or released.

Linked transactions are another area where mistakes happen. A transaction that appears to be below £40,000 may still need to be notified if it is linked with another transaction and the total consideration must be aggregated.

Leasehold rules are also easy to misread. For leases, the analysis is not limited to the premium. Rent can matter, and for new leases the net present value of the rent is part of the consideration analysis. Whether the lease is new, assigned, or surrendered also changes the test.

The guidance on wills uses the phrase “almost always exempt”. That wording itself signals that caution may be needed in unusual cases, especially where post-death rearrangements involve some form of compensation or debt assumption by a new beneficiary.

Finally, HMRC guidance is not the same as legislation. It is helpful for understanding HMRC’s view, but the legal position ultimately depends on the statutory rules. That is particularly relevant where a transaction is unusual, linked, or structured in more than one step.

Key takeaways

• A transfer can avoid both SDLT and the need for a return if there is no chargeable consideration, but debt and mortgages can still count as consideration.
• Inheritance under a will and qualifying transfers on divorce or civil partnership breakdown are treated differently and are generally exempt on the basis described by HMRC.
• Low-value freehold and leasehold transactions may not need to be reported, but linked transactions, rent, lease length, and the type of lease transaction must all be checked carefully.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guide to Property Transactions Exempt from Stamp Duty Land Tax

View all HMRC SDLT Guidance Pages Here