Do you pay SDLT on the whole amount paid to buy out a trust share, or only on the land value?

Introduction

People often ask this question where a home is partly owned already, but the remaining share is held by an estate or trust. The difficulty is working out what counts as chargeable consideration for Stamp Duty Land Tax (SDLT), especially where the figures include tax reimbursements, estate adjustments or trust accounting entries.

A common concern is whether SDLT is due only on the value of the land being acquired, or on the full amount paid on completion if that amount includes other sums such as reimbursement of inheritance tax previously paid by the estate. Another issue is whether the higher rates for additional dwellings can be avoided if the extra share is bought by one unmarried partner alone.

The Question

The scenario was this:

An unmarried couple each already held a 25% beneficial interest in a dwelling. The remaining 50% was held within an estate or trust structure. They wanted to become full owners.

The proposed steps were:

• first, the personal representatives would assent legal title to the couple’s existing beneficial shares, with no money changing hands; and
• second, one of the partners, or both together, would buy the estate or trust’s remaining 50% share for an agreed sum funded by mortgage finance.

The figures used in the estate and trust accounts showed two components:

• the value attributed to the 50% land share being bought out; and
• a separate amount described as reimbursement of inheritance tax previously borne by the estate in relation to the trust share.

The practical questions were:

• Is SDLT charged only on the amount attributable to the land interest being acquired?
• Does a reimbursement of inheritance tax form part of chargeable consideration?
• If one unmarried partner buys the extra share alone and owns no other dwelling, can the higher rates surcharge be avoided?
• Can the assent and the purchase be documented as separate transactions for SDLT purposes?

Nick’s Explanation

Nick’s view was that the transaction should be analysed in two parts.

First, where personal representatives assent legal title to an existing beneficial entitlement and no consideration is given, that step is generally exempt from SDLT. In his words, the assent of the existing shares is exempt “where no consideration passes”.

Second, the chargeable transaction is the later purchase of the remaining 50% share. Nick’s core point was that SDLT is charged on what is given for the acquisition of the land interest, not on value already owned. So the already-owned equity is not taxed again.

On the inheritance tax reimbursement point, Nick drew an important distinction. He said that a repayment to the estate for tax it had already paid does not, by itself, represent consideration for the land. He treated that as separate from the land price unless the contract makes payment of that sum part of the bargain for the land transfer.

His reasoning can be summarised like this:

• the no-consideration assent of an existing entitlement is not chargeable;
• SDLT applies to the acquisition of the remaining share only;
• existing ownership is not itself chargeable consideration;
• a tax reimbursement is not automatically consideration for land simply because it appears in completion figures; and
• if an unmarried partner buys alone and owns no other dwelling, the higher rates test is applied to that buyer individually.

He also said the documents should keep the assent and the purchase clearly separate, with the assent expressed to be for no consideration and the purchase document stating the actual consideration for the share being acquired.

The Law

The starting point is Finance Act 2003.

Section 43 and section 55 deal with the charge to SDLT and the way tax is calculated by reference to chargeable consideration.

Schedule 4 paragraph 1 provides that SDLT is charged by reference to chargeable consideration given for the subject matter of the transaction. Schedule 4 paragraph 8 extends chargeable consideration to certain liabilities assumed by the buyer, but only where those liabilities are assumed as part of the consideration for the land transaction.

For assents by personal representatives, Schedule 3 paragraph 3A provides an exemption where the transfer is made for no consideration. Schedule 4 paragraph 8A deals with the position where secured debt is assumed.

Section 108 deals with linked transactions. If there are linked transactions, chargeable consideration may be aggregated, but only to the extent there is chargeable consideration in the first place. An exempt no-consideration assent does not become chargeable simply because it is linked to a later purchase.

The higher rates for additional dwellings are in Schedule 4ZA. Paragraph 2(2) applies the higher rates test to the purchaser. Paragraph 9 is important because it means unmarried couples are not treated in the same way as spouses or civil partners for this purpose. So one unmarried partner’s property ownership is not automatically attributed to the other.

Analysis

The SDLT analysis is best done step by step.

Step 1: identify what is already owned

If each partner already has a 25% beneficial interest, that existing ownership is not being acquired again. SDLT is not charged on value that the buyers already own. The tax is charged on the acquisition of a chargeable interest for consideration, not on pre-existing equity.

Step 2: separate the assent from the purchase

If the personal representatives or trustees transfer legal title to reflect the couple’s existing beneficial interests, and no consideration is given for that assent, that step falls within the exemption in Schedule 3 paragraph 3A. That means the assent itself should not trigger SDLT, assuming it is genuinely for no consideration.

Step 3: identify the actual land interest being bought

The chargeable acquisition is the remaining 50% share held by the estate or trust. That is the interest being purchased. In principle, SDLT is charged on the consideration given for that acquisition.

Step 4: decide whether all sums shown in the accounts are consideration for land

This is where many transactions become difficult. A completion statement or estate account may show one total amount payable, but not every item in that total is necessarily chargeable consideration for SDLT.

If part of the figure is simply reimbursement of inheritance tax already paid by the estate, the key question is whether that payment is truly part of the bargain for the land transfer. If it is merely an accounting adjustment between estate and trust funds, or a repayment of tax previously borne by the estate, there is a good argument that it is not consideration “for” the acquisition of the land interest.

By contrast, if the contract says that completion cannot occur unless the buyer pays that amount as part of the agreed price for the transfer, HMRC may argue that it forms part of chargeable consideration because it is a payment the buyer must make to obtain the land.

Step 5: apply that distinction to the figures

On the facts given, two possible figures were in play:

• the lower figure representing the value of the 50% share being bought out; and
• the higher figure including that amount plus a separate inheritance tax reimbursement.

If the inheritance tax reimbursement is genuinely separate from the land bargain, SDLT should apply only to the lower figure attributable to the 50% land share.

If, however, the contractual documentation treats the higher figure as the consideration payable to acquire the 50% share, the practical SDLT filing position may be that SDLT is calculated on that higher figure.

So the answer does not turn simply on how the estate accounts label the payment. It turns on what the land transaction documents actually require the buyer to give for the transfer.

Step 6: consider linked transactions

Even if the assent and the purchase are linked in a broad factual sense, section 108 does not change the result if the assent is exempt and for no consideration. The important point is to document them separately and clearly.

Step 7: consider the higher rates surcharge

If one unmarried partner buys the remaining share alone, the higher rates test is applied to that purchaser. If that purchaser owns no other dwelling at the effective date, the Schedule 4ZA surcharge should not apply on that basis alone. The other partner’s ownership is not attributed merely because they are in a relationship, since they are not married or in a civil partnership.

That said, the usual Schedule 4ZA tests still need to be checked in full, including whether the buyer owns any other major interest in another dwelling and whether any replacement of main residence rules are relevant.

Outcome

The practical conclusion is this:

• the no-consideration assent of an existing beneficial entitlement is generally exempt from SDLT;
• SDLT is not charged again on equity already owned;
• the taxable amount should be the consideration given for the remaining share being acquired;
• a separate inheritance tax reimbursement does not automatically become chargeable consideration just because it appears in the overall figures; and
• if one unmarried partner buys alone and owns no other dwelling, the higher rates surcharge may be avoided, subject to the full Schedule 4ZA conditions.

In short, the critical issue is whether the inheritance tax reimbursement is legally part of the consideration for the land transfer. If it is not, SDLT should be based on the lower land figure rather than the higher all-in payment figure.

Practical Steps

1. Review the contract, transfer and completion statement carefully. The SDLT result depends heavily on how the consideration is described in the transaction documents.
2. Make sure the assent and the purchase are documented as two distinct steps.
3. State clearly in the assent that it is for no consideration and reflects an existing entitlement.
4. In the purchase document, identify precisely what amount is paid for the land interest itself.
5. If there is an inheritance tax reimbursement or similar estate adjustment, decide whether it is:
   • a separate accounting repayment outside the land bargain, or
   • a contractual payment required to obtain the transfer.
6. Check the higher rates position by reference to the actual purchaser at completion, especially where only one unmarried partner is buying.
7. Ask the conveyancer or SDLT specialist to align the SDLT return with the contract wording and supporting file note, so the basis of self-assessment is clear if HMRC later asks questions.
8. If anyone suggests the dwelling is uninhabitable or not suitable for use as a dwelling, remember that the threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. Ordinary disrepair, outdated condition or the need for works will often not be enough.

Conclusion

Where buyers already own part of a property and are only buying out the remaining estate or trust share, SDLT should focus on what is actually being acquired for consideration. Existing equity is not taxed again. A no-consideration assent is generally exempt. The main point of care is whether any extra sum, such as reimbursement of inheritance tax, is truly part of the consideration for the land or merely a separate estate accounting item.

Legal References Used

• Finance Act 2003, section 43
• Finance Act 2003, section 55
• Finance Act 2003, section 108
• Finance Act 2003, Schedule 3 paragraph 3A
• Finance Act 2003, Schedule 4 paragraph 1
• Finance Act 2003, Schedule 4 paragraph 8
• Finance Act 2003, Schedule 4 paragraph 8A
• Finance Act 2003, Schedule 4ZA paragraph 2(2)
• Finance Act 2003, Schedule 4ZA paragraph 9
• 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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