Do you pay SDLT on the full value or only the share acquired in a transfer of equity?

Introduction

People often ask whether Stamp Duty Land Tax (SDLT) is charged on the full market value of a property when one joint owner takes over the other owner’s share. This commonly arises after a separation, where a flat or house is transferred from joint names into one person’s sole name.

The answer is that SDLT is not usually worked out simply by looking at the property’s market value. The key issue is the amount of chargeable consideration given for the transfer. In many transfer of equity cases, that means looking at whether any money is paid, whether any mortgage debt is taken over, and whether the transfer is made under a qualifying court order.

The Question

A buyer and their former partner bought a flat together. They are now separating, and the property is being transferred from their joint ownership into the buyer’s sole name through a transfer of equity. The property is said to be worth £395,000.

The practical question is whether SDLT is charged by reference to:

• the full value of the flat,
• half of that value, because only the former partner’s share is being acquired, or
• some other figure entirely.

Nick’s Explanation

Nick’s key point was that the SDLT result depends first on whether the transfer is made pursuant to a court order, and if not, whether there is any chargeable consideration.

In anonymised form, his explanation was:

“A lot depends on whether the transfer of equity is subject to a court order. If the division of assets is made under a court order, no stamp duty may be payable. If there is no court order, then where the transfer involves no chargeable consideration, such as no money changing hands and no mortgage being taken on, the transfer would not be subject to SDLT.”

That is the right starting point. In a transfer of equity, SDLT is generally charged on the consideration given for the acquisition, not automatically on the property’s open market value.

The Law

The main SDLT charging rules are found in the Finance Act 2003.

• Section 42 provides that SDLT is charged on land transactions.
• Section 43 and related provisions look to chargeable consideration.
• Schedule 3, paragraph 1 provides that a land transaction is exempt if there is no chargeable consideration.
• Schedule 3, paragraph 3 provides relief in certain transactions carried out pursuant to court orders or similar orders in connection with the dissolution or annulment of a marriage, the ending of a civil partnership, or in some cases separation arrangements recognised by the legislation.

HMRC’s published guidance and SDLT Manual also explain an important practical point: taking over responsibility for an existing mortgage can count as chargeable consideration, even if no cash is paid to the outgoing owner. That is because assuming debt is treated as consideration for SDLT purposes.

Where a person already owns a share in a property and acquires the remaining share, SDLT is not charged on the whole property value merely because the whole property is then in that person’s name. The focus is on what is given in return for the additional interest acquired.

Analysis

The analysis usually works in the following order.

First, ask whether the transfer is made under a qualifying court order.

If it is, the transfer may fall within the exemption or relief for certain court-ordered transfers between separating spouses or civil partners. If that applies, SDLT may not be payable even if the property has substantial value.

However, the original reply referred to a “common-law partner”. That expression has no special status in SDLT law. Simply living together does not create the same legal position as marriage or civil partnership. Whether relief applies depends on the statutory conditions, not on informal relationship labels. So it is necessary to check carefully whether there is in fact a qualifying order and whether the legislation covers the parties’ circumstances.

Second, if there is no qualifying court-order relief, ask whether there is any chargeable consideration.

If the person taking over the property pays nothing to the outgoing co-owner and does not assume any mortgage debt, there may be no chargeable consideration at all. In that case, Schedule 3, paragraph 1 can apply, and no SDLT is due.

Third, if there is a mortgage, ask whether the transferee is taking over the outgoing owner’s share of the debt.

This is often the decisive issue in transfer of equity cases. For example, if there is an outstanding mortgage and one co-owner is released while the remaining owner becomes solely liable, the amount of debt taken on can amount to chargeable consideration. SDLT is then assessed on that consideration, not necessarily on the market value of the property.

Fourth, if money is paid for the outgoing share, that payment is also chargeable consideration.

If there is both a cash payment and mortgage debt assumed, both may need to be taken into account.

Fifth, market value is not normally the default measure here.

In the situation described, the figure of £395,000 is the property value, but that does not by itself determine the SDLT charge. Nor is the answer automatically 50% of that figure. The relevant amount is usually the consideration for the share being acquired, which may be:

• nothing,
• cash paid to the former co-owner,
• the share of mortgage debt taken over, or
• a combination of those elements.

By way of example:

• If there is no mortgage and no payment at all, there is usually no SDLT.
• If there is a mortgage and the remaining owner takes over the outgoing owner’s share of that debt, SDLT may be payable on the amount of debt assumed.
• If the remaining owner pays a lump sum for the outgoing share, SDLT may be payable on that payment, plus any relevant mortgage debt assumed.

The property’s physical condition can matter in some SDLT cases where a buyer argues that a dwelling was not suitable for use as a dwelling. In an uninhabitable or not suitable for use case, the condition thresholds are now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. That point is not central to a standard transfer of equity question like this one, but it is relevant where someone is considering whether residential rates apply at all.

Outcome

The practical answer is that SDLT is usually not based on the full property value simply because one joint owner becomes sole owner. It is also not automatically based on 50% of the market value.

The correct SDLT treatment depends on:

• whether the transfer is made under a qualifying court order,
• whether any money is paid, and
• whether any mortgage debt is taken over.

If there is a qualifying court-order exemption, no SDLT may be payable. If there is no court-order relief but there is no chargeable consideration, no SDLT may be payable. If there is consideration, SDLT is generally calculated by reference to that consideration, not the whole market value of the flat.

Practical Steps

To assess the SDLT position on a transfer of equity, a reader should check the following:

1. Is the transfer being made pursuant to a court order or similar qualifying order?
2. Are the parties married, in a civil partnership, or in another legal position covered by the legislation?
3. Is any cash being paid to the outgoing owner?
4. Is there an existing mortgage?
5. If so, is the remaining owner taking over the outgoing owner’s share of the mortgage liability?
6. What is the amount of total chargeable consideration once cash and assumed debt are added together?

The transfer deed, mortgage redemption statement, and lender’s requirements will usually show whether debt is being assumed. Those documents are often more important for SDLT than the headline market value of the property.

Conclusion

In a transfer of equity after a separation, SDLT is generally based on chargeable consideration, not automatically on the full value of the property. If there is no qualifying court-order relief, the key question is whether any money is paid or any mortgage debt is taken over. If neither applies, there may be no SDLT at all.

Legal References Used

• Finance Act 2003, section 42
• Finance Act 2003, section 43 and related chargeable consideration provisions
• Finance Act 2003, Schedule 3, paragraph 1
• Finance Act 2003, Schedule 3, paragraph 3
• HMRC Stamp Duty Land Tax Manual, SDLTM03720
• HMRC guidance on transferring ownership of land or property
• 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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