Can first-time buyer SDLT relief apply on a transfer of equity, and does the £625,000 limit look at the full property value or the amount paid?

Introduction

People often ask whether first-time buyer Stamp Duty Land Tax relief can apply when ownership of a home changes after the original purchase, rather than on a straightforward sale. A common example is where one co-owner is removed and a new partner is added. The key questions are usually whether the incoming owner can claim first-time buyer relief, and whether the relevant SDLT threshold is based on the whole market value of the property or only the amount being paid for the share acquired.

In the right circumstances, a transfer of equity can be a separate land transaction for SDLT purposes. That means the incoming owner’s own status matters, and the SDLT calculation usually focuses on the chargeable consideration for the interest being acquired.

The Question

A homeowner jointly owns a residential property with another person. When they originally bought the property, one buyer qualified as a first-time buyer but the other did not, so no first-time buyer relief was available on that earlier purchase.

Now, the existing co-owner is to be removed and the homeowner’s partner is to be added instead. The partner has never owned property before. The property will be the couple’s only or main residence. The property is worth £600,000, and the incoming partner will pay £300,000 for the outgoing owner’s share.

The issue is whether first-time buyer relief can apply to this transfer of equity, and if so, whether the £625,000 threshold is tested by reference to the full value of the property or the £300,000 consideration being paid.

Nick’s Explanation

Nick’s view was that the transfer is a separate SDLT transaction from the original purchase. He explained that first-time buyer relief was not available on the original acquisition because all purchasers had to be first-time buyers, and one of them was not.

On the later transfer, however, the relevant purchaser is the incoming partner alone. In anonymised form, his reasoning was:

“The new transaction is treated separately. SDLT is charged on the acquisition of a chargeable interest, and the person acquiring that interest is the purchaser for this transaction.”

He also explained that the SDLT charge is based on the chargeable consideration for the interest being acquired, not the full market value of the property, saying:

“The relevant figure is the amount actually being paid for the share acquired. If that amount is within the first-time buyer threshold, the relief can apply, assuming the other conditions are met.”

On the facts given, that meant the incoming partner could potentially claim first-time buyer relief on £300,000, because that was the consideration for the share being acquired and the partner was the only purchaser in this new transaction.

The Law

SDLT is charged on land transactions under the Finance Act 2003. A transfer of equity can amount to a land transaction where a person acquires a chargeable interest in land.

Section 43 Finance Act 2003 provides the basic rule that SDLT applies to land transactions. In broad terms, the acquisition of an interest in land for consideration is capable of being a chargeable transaction.

Section 50 Finance Act 2003 and Schedule 4 Finance Act 2003 deal with chargeable consideration. The starting point is that SDLT is calculated by reference to the consideration given for the acquisition. In a typical transfer of equity for value, that means the amount paid for the share being transferred, together with any other consideration that must be taken into account, such as the assumption of mortgage debt where relevant.

First-time buyer relief is contained in Schedule 6ZA Finance Act 2003. The relief applies only if the statutory conditions are met. Two points are especially important here:

• Under paragraph 1, the purchaser must be a first-time buyer and must intend to occupy the dwelling as their only or main residence.
• Under paragraph 1(2), where there is more than one purchaser, all purchasers must be first-time buyers for the relief to apply.

Paragraph 2 of Schedule 6ZA sets the value limit for the relief. The legislation looks to the chargeable consideration for the transaction, not simply the gross market value of the whole property.

Analysis

The position can be analysed in stages.

First, the original purchase and the later transfer of equity are not treated as one continuous SDLT event. They are separate transactions. The fact that first-time buyer relief was unavailable on the original purchase does not automatically prevent relief from being available on a later transaction involving a different purchaser.

Second, on the original purchase, relief was correctly unavailable if one of the buyers had previously owned property. Schedule 6ZA requires all joint purchasers to be first-time buyers. If even one buyer fails that test, the relief is lost for the whole transaction.

Third, the later transfer of equity must be looked at on its own facts. If the outgoing co-owner transfers their share to the incoming partner, the incoming partner is the person acquiring a chargeable interest. The existing homeowner is not necessarily a purchaser in that transaction merely because they remain on title after it completes.

Fourth, if the incoming partner has never previously owned a major interest in a dwelling anywhere in the world, and intends to occupy the property as their only or main residence, they may satisfy the first-time buyer conditions in Schedule 6ZA.

Fifth, the value cap for first-time buyer relief is tested against the chargeable consideration for the transaction. On the facts described, that is £300,000 for the outgoing owner’s share, not the full £600,000 market value of the whole property.

On that basis, if the only consideration is £300,000 and no other amount has to be included, the transaction falls within the £625,000 threshold.

There is, however, one practical point that should always be checked carefully in transfer of equity cases: whether the incoming owner is also taking on responsibility for part of an existing mortgage. If so, the assumption of secured debt can count as chargeable consideration for SDLT purposes. In some cases, that increases the figure on which SDLT is calculated. So while the general analysis points to relief being available on the facts given, the actual SDLT return should be prepared using the full consideration rules, including any mortgage element if applicable.

Outcome

Where one co-owner is replaced by a partner who is a genuine first-time buyer, first-time buyer SDLT relief can in principle apply to the transfer of equity as a separate transaction.

On the scenario described, the relevant threshold is tested by reference to the chargeable consideration for the share being acquired, not the full market value of the property. If the incoming partner pays £300,000 for the outgoing owner’s share, and the statutory conditions are otherwise met, the transaction can fall within the first-time buyer relief rules.

Practical Steps

Anyone assessing a similar transfer of equity should work through the following points:

• Confirm who the purchaser is for the new transaction. In many cases, it is only the incoming co-owner.
• Check whether the incoming owner has ever held a major interest in a dwelling anywhere in the world.
• Confirm that the property will be the incoming owner’s only or main residence.
• Identify the full chargeable consideration, including any cash payment and any mortgage debt being assumed.
• Compare that chargeable consideration with the threshold in Schedule 6ZA Finance Act 2003.
• Ensure the SDLT return reflects the transfer as a separate land transaction from the original purchase.
• If there is a mortgage, ask the conveyancer or tax adviser to calculate whether the debt assumption changes the SDLT figure.

Conclusion

A transfer of equity can qualify for first-time buyer SDLT relief even if the original purchase did not. In a case where an outgoing co-owner is replaced by a partner who has never owned property before, the key figure is usually the chargeable consideration for the share acquired. On the facts described, that points to the £300,000 consideration rather than the £600,000 total property value.

Legal References Used

• Finance Act 2003, section 43
• Finance Act 2003, section 50
• Finance Act 2003, Schedule 4
• Finance Act 2003, Schedule 6ZA, including paragraph 1, paragraph 1(2) and paragraph 2

This page was last updated on 22 March 2026.

See all questions and answers categorized in this sitemap. Or use Google site search below.