Do you pay SDLT when buying out your spouse’s share of the family home?

Introduction

People often ask whether Stamp Duty Land Tax (SDLT) is due when one spouse takes over the other spouse’s share of the family home during a separation. This usually comes up where one person is remortgaging, raising funds, and becoming the sole owner of the property.

The concern is understandable. SDLT can be a significant cost, and many people want to know whether they need a separation agreement, court order, or divorce paperwork before the transfer can take place without a tax charge.

The Question

A married couple are separating on amicable terms. They jointly own their home. One spouse plans to buy out the other spouse’s share, remortgage the property, and release equity so that the property can remain in that spouse’s sole name.

The question is whether SDLT is payable on that transfer, and whether any formal legal document is needed to make sure no SDLT liability arises.

Nick’s Explanation

Nick’s explanation was that the starting point is the SDLT charging rule in section 49 of the Finance Act 2003, under which SDLT only applies to a “chargeable transaction”. Schedule 3 then lists transactions that are exempt from charge.

He explained that paragraph 3 of Schedule 3 provides an exemption where the purchaser is the spouse or civil partner of the vendor. In practical terms, if one spouse acquires the other spouse’s interest in the property while they are still legally married, the transfer is generally exempt from SDLT.

Nick also noted that there are further relieving provisions for transfers connected with divorce or separation, including transfers made under qualifying formal arrangements. He added that, in practice, the conveyancer would still prepare the transfer deed needed to change the legal ownership, but a formal separation agreement or divorce order is not required solely in order for the spouse exemption to apply where the parties remain legally married at the time of transfer.

The Law

SDLT is charged under Part 4 of the Finance Act 2003 on land transactions, but only where the transaction is a chargeable transaction.

The key provisions here are:

• Finance Act 2003, section 49, which provides that SDLT is charged on chargeable transactions.
• Finance Act 2003, Schedule 3, paragraph 3, which exempts certain transactions between spouses and civil partners.
• Finance Act 2003, Schedule 3, paragraph 3A, which extends relief in certain cases involving divorce, dissolution, annulment, judicial separation, or separation in circumstances where the marriage or civil partnership has broken down.

In broad terms, the legislation recognises that transfers of property interests between spouses and civil partners should not usually trigger SDLT in the same way as an ordinary arm’s length purchase.

Analysis

The position can be worked through in stages.

First, when one spouse takes over the other spouse’s share in the home, there is a land transaction. That means SDLT has to be considered.

Second, the next question is whether the transaction is exempt. If the transfer is from one spouse to the other spouse while they are still legally married, Schedule 3, paragraph 3 is the main provision to consider. On the facts described, that exemption is likely to apply.

Third, many people worry that paying money to the outgoing spouse, taking over mortgage debt, or remortgaging the property must create SDLT. In many ordinary property transactions, consideration would indeed matter. But where a statutory exemption applies, the transaction is not charged in the usual way.

Fourth, it is important to distinguish between being separated in practice and being legally divorced. If the parties are still spouses in law at the date of transfer, the spouse exemption is generally the first and most straightforward route.

Fifth, if the transfer instead takes place as part of formal divorce or separation arrangements, paragraph 3A may also be relevant. That provision was introduced to ensure that transfers connected with relationship breakdown are not unfairly taxed simply because they occur after the parties stop living together or as part of formal settlement arrangements.

Sixth, although a court order or separation agreement may be important for wider family law reasons, it is not necessarily required just to secure SDLT treatment under the basic spouse exemption where the transfer occurs while the marriage still legally exists.

Seventh, the transfer still needs to be properly documented from a conveyancing perspective. A transfer deed, usually a TR1, will normally be needed, and the lender’s requirements must also be satisfied if there is a remortgage. The solicitor or conveyancer dealing with the transfer should confirm the SDLT filing position and whether an SDLT return is needed even if no tax is payable.

This is not an “uninhabitable” or “not suitable for use” case, but for completeness, readers sometimes confuse different SDLT reliefs. In cases about whether a dwelling is unsuitable for use as a dwelling, the threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

Outcome

Where one spouse buys out the other spouse’s share of the family home while they are still legally married, the transfer will generally be exempt from SDLT under Finance Act 2003, Schedule 3, paragraph 3.

On those facts, a formal separation agreement or divorce decree is not required solely to prevent an SDLT charge. The key point is that the transfer is between spouses.

Practical Steps

If you are in this position, the sensible next steps are:

• Ask your conveyancer to confirm in writing which SDLT exemption or relief is being relied on.
• Make sure the transfer is completed while the legal status of the relationship matches the exemption being used.
• Ensure the transfer deed and mortgage documents accurately reflect what is happening.
• Check whether an SDLT return must still be submitted, even if no SDLT is payable.
• If the matter is moving into formal divorce or separation proceedings, ask whether Schedule 3, paragraph 3A should also be considered.
• Keep copies of the transfer deed, mortgage documents, and any family law paperwork in case HMRC ever asks how the exemption applied.

Conclusion

If you are buying out your spouse’s share of the home and you are still legally married at the time of transfer, SDLT will generally not be payable because the transfer is exempt. The transfer should still be properly handled by a conveyancer, but a formal separation agreement is not usually required just for SDLT purposes.

Legal References Used

• Finance Act 2003, section 49
• Finance Act 2003, Schedule 3, paragraph 3
• Finance Act 2003, Schedule 3, paragraph 3A
• 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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