Do you pay SDLT when removing a sibling from a mortgage and transfer of equity?

Introduction

People often ask whether Stamp Duty Land Tax (SDLT) is payable when one joint owner is removed from a property and from the mortgage. The question usually comes up during a transfer of equity, especially where no cash is being paid between family members. The important point is that SDLT is not limited to money changing hands. Taking over another person’s share of a mortgage can itself count as chargeable consideration.

The Question

A homeowner jointly owns a residential property with a sibling. Both are named on the mortgage, and there is an outstanding mortgage balance of about £186,000. The homeowner now wants the sibling removed from both the legal title and the mortgage, so that the homeowner will own the property alone and be solely responsible for the borrowing. The question is whether SDLT is payable on that transfer.

Nick’s Explanation

Nick’s explanation was that SDLT depends on whether there is chargeable consideration for the transfer. In an anonymised summary, his key point was:

“Even if no cash is paid, taking over the other owner’s share of the mortgage debt is treated as consideration for SDLT purposes.”

He explained that if the mortgage balance is around £186,000 and the owners hold the property equally, the amount treated as consideration is likely to be half of the mortgage balance, being about £93,000. SDLT is then considered by reference to that amount, using the residential rates in force on the date of the transfer.

He also noted that if the person taking over the property already owns another dwelling, or will own more than one dwelling at the end of the day of the transaction, the higher rates under Schedule 4ZA Finance Act 2003 may apply. If the property is the person’s only dwelling and main residence, the standard residential rates are generally the starting point instead.

The Law

SDLT is charged on land transactions under Part 4 of the Finance Act 2003.

Section 49 Finance Act 2003 provides that a land transaction is chargeable to SDLT unless an exemption applies.

Section 50 Finance Act 2003 confirms that Schedule 4 sets out what counts as chargeable consideration.

Paragraph 8 of Schedule 4 Finance Act 2003 is especially important in transfer of equity cases. It provides, in substance, that where a purchaser takes property subject to an existing debt, or assumes liability for a debt such as a mortgage, that assumed debt can count as chargeable consideration for SDLT.

For higher rates on additional dwellings, the relevant rules are in Schedule 4ZA Finance Act 2003.

Analysis

The SDLT analysis usually works in the following steps.

First, identify what is being transferred. In this type of case, one co-owner transfers their share in the property to the other co-owner.

Second, ask whether the person receiving that share is giving any chargeable consideration. Consideration can be cash, but it can also include taking over liability for a mortgage.

Third, work out the amount of mortgage debt being taken over. If the outstanding mortgage is about £186,000 and the transferor is entitled to half the property and is effectively being released from half the mortgage burden, the assumed consideration is commonly taken to be about £93,000.

Fourth, apply the SDLT rates in force at the effective date of the transaction. If the chargeable consideration falls below the SDLT threshold for standard residential rates, there may be no SDLT to pay, although the position still needs to be checked carefully. If the higher rates for additional dwellings apply, those rates are charged from the first pound of chargeable consideration above the relevant threshold structure in force at the time.

Fifth, consider whether any relief or special rule changes the result. In a straightforward transfer between siblings, there is usually no family exemption from SDLT. The fact that the transfer is between relatives does not, by itself, prevent SDLT from arising.

On the figures given, if the consideration is about £93,000, the practical result depends on the SDLT rate bands in force on the date of completion and whether the higher rates apply. In many ordinary owner-occupier cases, that amount may fall below the point at which standard-rate SDLT becomes payable. But if the higher rates for additional dwellings apply, there may be SDLT even on a relatively modest amount of consideration.

Outcome

Removing a sibling from the mortgage and title can trigger SDLT if the remaining owner takes over the sibling’s share of the mortgage debt. In a case with an outstanding mortgage of about £186,000 and equal ownership, the likely chargeable consideration is about £93,000.

That does not automatically mean SDLT will be payable in cash in every case, because the answer depends on the residential rates in force at completion and whether the higher rates for additional dwellings apply. But the transaction is not ignored for SDLT simply because no money is paid to the sibling.

Practical Steps

To assess the position properly, a homeowner should:

• confirm the exact outstanding mortgage balance at the date of transfer;
• confirm the beneficial ownership shares, as this affects how much debt is being taken over;
• check whether any cash is also being paid as part of the transfer;
• check how many residential properties they will own at the end of the transaction;
• check whether the property is their only or main residence;
• ask the conveyancer or solicitor to calculate the SDLT on the actual completion figures; and
• ensure any SDLT return is filed correctly if one is required.

If the case involves any argument that the property was not suitable for use as a dwelling, the condition threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. Ordinary disrepair or the need for works will often not be enough.

Conclusion

In a transfer of equity, SDLT can arise where one owner takes over another owner’s share of the mortgage. For SDLT purposes, the assumed mortgage debt is treated as consideration even if no cash changes hands. The key figure is usually the share of the mortgage being taken on, and the final SDLT result depends on the rates in force and whether the higher rates for additional dwellings apply.

Legal References Used

• Finance Act 2003, section 49
• Finance Act 2003, section 50
• Finance Act 2003, Schedule 4, paragraph 8
• Finance Act 2003, Schedule 4ZA
• Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799

This page was last updated on 22 March 2026.

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