SDLT On Buying Out A Parent’s Share In A Flat
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Do you pay SDLT on the whole flat or only the share you are buying from a joint owner?
Introduction
This issue often comes up where family members bought a building together, later split it into flats, and only some of the legal paperwork reflects the real ownership position. A common question is whether Stamp Duty Land Tax (SDLT) is charged on the whole flat being transferred, or only on the share that is actually being acquired.
The answer usually depends on the difference between legal ownership and beneficial ownership. If the buyer already owned part of the property beneficially, SDLT may only be charged on the value of the additional share being acquired.
The Question
Two family members bought a building together around ten years ago in equal shares. The building had planning permission to be converted into three flats, and the conversion was carried out. Because of advice received at the time about lease arrangements, leases were created for two of the flats in a way that did not put both owners on every lease, and one flat was left without a lease until later.
In 2025, a lease was created for the remaining flat so that it could be sold. One co-owner is now buying that flat from the other and paying £50,000 for the other person’s 50% interest. The buyer believes they already owned the other 50% through the original joint purchase of the building. The question is whether SDLT should be calculated on the £50,000 being paid for the half share, or on 100% of the flat.
Nick’s Explanation
Nick’s core point was that SDLT should be based on what is truly being acquired, not just on whose name appears on the lease. In anonymised form, his reasoning was:
When two people originally bought the whole building equally, each of them may have acquired a beneficial interest in the whole property, even if later lease arrangements did not mirror that position perfectly. If that beneficial ownership remained unchanged, then a later transfer of one flat from one co-owner to the other may only involve the transfer of the seller’s half share.
Nick explained the distinction this way: legal ownership is the name on the title or lease, while beneficial ownership is the underlying economic ownership. For SDLT purposes, that underlying ownership can matter. If the buyer already had a 50% beneficial interest in the flat as part of the original joint ownership of the building, then the buyer may only now be acquiring the remaining 50% interest from the other co-owner.
On that view, the chargeable consideration would normally be the amount actually paid for that half share, rather than the full value of the flat.
The Law
SDLT is charged under the Finance Act 2003 on land transactions involving the acquisition of a chargeable interest.
Finance Act 2003, section 42 imposes SDLT on land transactions.
Finance Act 2003, section 43 explains that a land transaction involves the acquisition of a chargeable interest.
Finance Act 2003, section 48 deals with chargeable consideration in money or money’s worth.
Finance Act 2003, section 50 and Schedule 4 contain further rules on chargeable consideration.
In broad terms, SDLT is usually calculated by reference to the chargeable consideration given for the interest acquired. That means one must identify exactly what interest the buyer is obtaining in the transaction.
Where property is jointly owned, it is important to distinguish:
legal title, meaning whose name appears on the lease or registered title; and
beneficial ownership, meaning who is entitled in equity to the value of the property.
In some cases, the legal documents may not fully match the beneficial position. If a person already has a beneficial share and later acquires only the other co-owner’s share, the SDLT analysis should focus on the additional interest actually acquired.
Analysis
The practical analysis is usually as follows.
Start with the original purchase of the building. If the building was bought jointly in equal shares, that may indicate that each buyer held a 50% beneficial interest in the whole building, unless there was some later agreement or declaration changing that position.
Then consider the later creation of leases for individual flats. A lease granted into one person’s name does not automatically prove that the beneficial ownership of that flat became 100% theirs. It may simply be part of the legal structure used to separate the flats.
Next, identify whether the flat now being transferred was always treated as jointly owned in substance. Relevant evidence may include the original transfer, mortgage arrangements, contributions to purchase and renovation costs, accounts, rental income, insurance, and any written or unwritten agreement about equal ownership.
If the buyer already owned a 50% beneficial interest in the flat, then the present transaction is, in substance, a purchase of the seller’s remaining 50% share only.
If that is right, the chargeable consideration would usually be the £50,000 paid for that half share, not the full value of the flat.
The point that may have caused concern is that the lease for the flat was later put into the seller’s sole name. That is relevant to legal title, but it is not always conclusive on beneficial ownership. If the lease was created for practical or conveyancing reasons and did not alter the underlying 50/50 ownership, that supports the view that only a half share is now being acquired.
However, the position depends heavily on the facts and documents. If the earlier arrangements had the effect of giving the seller sole beneficial ownership of that flat, then the later purchase could amount to acquiring 100% of that flat, in which case SDLT would be assessed on the full consideration for that acquisition. The key question is not simply whose name is on the lease, but who already owned what in equity before the current transaction.
This is not an uninhabitable or not suitable for use case, but where readers are considering SDLT relief on that basis, the current threshold is relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. Ordinary disrepair, inconvenience, or the need for renovation will often not be enough.
Outcome
If the buyer genuinely already owned a 50% beneficial interest in the flat through the original joint purchase of the building, and that position was never changed, the better view is that the buyer is only acquiring the other 50% share now. In that case, SDLT should normally be calculated by reference to the £50,000 paid for that share.
If, on the other hand, the documents and surrounding facts show that the seller became the sole beneficial owner of the flat before the sale, then SDLT may be chargeable on the full interest now being transferred.
Practical Steps
Check the original purchase documents for the building to see how ownership was recorded.
Look for any declaration of trust, deed, agreement, or later arrangement that changed the original 50/50 beneficial ownership.
Review how the flats were dealt with after conversion, including who paid costs, who received income, and how the parties treated ownership in practice.
Ask the conveyancer to explain whether they are treating the transaction as a transfer of the whole beneficial interest or only a half share, and why.
If necessary, ask for the SDLT position to be reconsidered specifically by reference to beneficial ownership and the actual chargeable consideration for the interest acquired.
Make sure any SDLT return matches the true legal and beneficial position supported by the evidence.
Conclusion
SDLT is not automatically charged on 100% of a flat just because one person’s name appears on the lease. If the buyer already owned half the beneficial interest and is only buying the other half, SDLT should usually be based on the consideration for that half share. The decisive issue is the real ownership position in equity, not just the later lease wording.
Legal References Used
Finance Act 2003, section 42
Finance Act 2003, section 43
Finance Act 2003, section 48
Finance Act 2003, section 50
Finance Act 2003, Schedule 4
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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