Do joint buyers pay the 5% higher SDLT rate if each person’s share is under £40,000?

Introduction

This is a common Stamp Duty Land Tax question where several people buy a property together and each person takes only a fractional share. The issue is whether the higher rates for additional dwellings apply to each buyer simply because they already own another dwelling, or whether the low-value exception can prevent the surcharge from applying.

Where joint purchasers buy as tenants in common and the chargeable consideration attributable to each buyer’s interest is less than £40,000, the higher rates rules may not apply to that buyer at all. In the right case, that means no 5% surcharge is due.

The Question

Several siblings propose to buy a dwelling together. Each will acquire a one-third share as a tenant in common. The total purchase price is below £110,000, so the amount attributable to each buyer’s share is below £40,000.

The concern is that the conveyancer insists the 5% higher rates for additional dwellings still apply, even though HMRC’s published guidance appears to say otherwise. The practical question is whether the surcharge is in fact disapplied, and how a buyer can present the point clearly to a conveyancer.

Nick’s Explanation

Nick’s view was that the analysis was correct on the facts described. In anonymised form, his reasoning was:

“The ownership is as tenants in common. Each buyer is purchasing one-third of a property worth under £110,000. The consideration for each tenant in common is less than £40,000, so no stamp duty is due.”

That reflects the key point in HMRC’s guidance on Condition A in Schedule 4ZA: for a purchaser who acquires only a major interest with chargeable consideration below £40,000, the higher rates rules are not engaged for that interest.

Nick also noted a separate practical point about returns. If the transaction is wholly in cash and the consideration falls below the normal filing threshold, there may be no SDLT return requirement. If there is mortgage funding, process requirements can become more complicated in practice, even though the legal analysis of the surcharge remains the same.

The Law

The higher rates for additional dwellings are contained in Schedule 4ZA to the Finance Act 2003.

Condition A asks whether, at the end of the day of the transaction, the purchaser has a major interest in another dwelling and that interest has a market value of £40,000 or more. But Schedule 4ZA also contains a separate and important threshold for the purchased dwelling interest itself.

In broad terms, the higher rates do not apply if the chargeable consideration for the purchased major interest is less than £40,000. HMRC’s guidance at SDLTM09770 addresses this point and explains how it works in the case of joint purchasers.

Where purchasers buy as tenants in common, each buyer is treated as acquiring their own distinct share. The consideration attributable to that share is then considered for the £40,000 threshold. If a buyer’s share is acquired for less than £40,000, that buyer is outside the higher rates rules for that acquisition.

This is separate from the ordinary residential SDLT charging rules. If the amount chargeable on the transaction is below the relevant thresholds, no SDLT may be payable at all.

Analysis

Step 1: identify what each buyer is acquiring.

If the buyers take the property as tenants in common in equal shares, each is acquiring a separate one-third beneficial interest rather than an undivided joint tenancy where the analysis may need to focus differently. On the facts given, each buyer acquires a one-third major interest.

Step 2: work out the chargeable consideration attributable to each buyer’s interest.

If the total price is under £110,000 and there are three equal tenants in common, each buyer’s consideration is under £40,000.

Step 3: apply the Schedule 4ZA threshold.

HMRC’s published guidance at SDLTM09770 indicates that where the chargeable consideration for the purchased interest is less than £40,000, the higher rates do not apply to that purchaser. On these facts, each buyer falls below that threshold.

Step 4: consider whether ordinary SDLT is due anyway.

If the overall transaction value is below the normal residential SDLT threshold and there are no linked transaction complications, there may be no SDLT liability at all. The question raised here is specifically about the 5% surcharge, and on the facts described that surcharge should not apply.

Step 5: separate legal analysis from helpline or conveyancing practice.

HMRC helpline comments are not binding statements of law. Nor is a conveyancer’s initial view determinative if it conflicts with the legislation and HMRC’s published manual. The correct approach is to point to the statutory wording and HMRC manual paragraph dealing with joint purchasers and the under-£40,000 threshold.

Step 6: check for anything that could change the result.

The conclusion depends on the facts being exactly as stated: equal tenants in common shares, no linked transactions affecting consideration, and no unusual trust or financing structure that alters the purchaser analysis. If those facts hold, the surcharge analysis is straightforward.

Outcome

On the facts described, the practical conclusion is that the 5% higher rates for additional dwellings should not apply.

That is because each buyer’s acquired share is for less than £40,000, and HMRC’s guidance at SDLTM09770 supports that result for tenants in common. If the total purchase price is also below the ordinary residential SDLT threshold, there may be no SDLT payable at all.

Practical Steps

To assess and present the position clearly, a buyer should:

• confirm the buyers will hold as tenants in common rather than joint tenants;
• confirm the precise percentage share each person is acquiring;
• calculate the consideration attributable to each buyer’s share;
• check whether any linked transactions exist that could alter the consideration analysis;
• review HMRC manual SDLTM09770 and provide the relevant extract to the conveyancer;
• ask the conveyancer to explain, by reference to Schedule 4ZA FA 2003, why they say the under-£40,000 threshold does not apply;
• if necessary, obtain written specialist SDLT advice that addresses the statutory wording and HMRC guidance directly;
• check separately whether an SDLT return is required, because filing requirements and tax liability are related but distinct questions.

If a property is said to be uninhabitable or not suitable for use as a dwelling, that is a different argument and should not be relied on lightly. The condition thresholds are now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

Conclusion

Where three buyers each acquire a one-third tenant in common share and each share costs less than £40,000, the 5% higher SDLT rates should not apply to those acquisitions. The key is to focus on the consideration for each purchaser’s acquired interest and to support the position with Schedule 4ZA FA 2003 and HMRC guidance at SDLTM09770.

Legal References Used

• Finance Act 2003
• Schedule 4ZA Finance Act 2003
• HMRC SDLT Manual, SDLTM09770 – SDLT – higher rates for additional dwellings: Condition A – Para 3(2) Sch 4ZA FA2003
• HMRC guidance: Stamp Duty Land Tax: Transactions That Don’t Need a Return
• 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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