Is SDLT payable when a freehold is transferred from your company back to you personally?

Introduction

People often search for this issue when a lender, conveyancer or HM Land Registry raises a query about Stamp Duty Land Tax after a title transfer. A common example is where a homeowner has moved a freehold into a company for lease-extension or restructuring reasons and later needs to move it back into personal ownership to satisfy a remortgage lender.

The key SDLT question is usually this: is there any chargeable consideration for the transfer? In particular, does the person receiving the freehold take on any mortgage debt? If not, and if the freehold itself has only a nominal value, the transaction may fall below the SDLT notification threshold.

The Question

A homeowner owned the leasehold of the flat they lived in and also held the freehold title for the building. Another flat in the building was owned by unrelated leaseholders who had no financial interest in the freehold. The homeowner later transferred the freehold into a company they controlled so that a lease extension could be dealt with more easily.

When applying for a remortgage, the new lender required the freehold to be transferred from the company back into the homeowner’s personal name before issuing the mortgage offer. HM Land Registry then raised a requisition referring to HMRC guidance on debt assumption and SDLT.

The practical concern was whether SDLT would be payable on the transfer back to the individual, given that the flat had a mortgage of about £200,000 but the freehold itself appeared to have only a very small value, with low annual ground rent and limited income-producing potential.

Nick’s Explanation

Nick’s reasoning was that the starting point is to identify exactly what is being transferred and whether any debt is attached to that title.

In anonymised form, his view was:

“If the mortgage is secured only on the leasehold interest and not on the freehold title, and the freehold is being transferred for a nominal amount only, then the chargeable consideration for the freehold transfer should be just that nominal amount.”

He also highlighted the importance of the SDLT notification threshold:

“Where the consideration is less than £40,000, the transaction does not need to be notified to HMRC, and no SDLT is payable.”

Nick therefore focused on two factual checks:

1. whether the existing mortgage was secured only on the leasehold title and not the freehold title; and
2. whether the individual was assuming any part of the mortgage debt as part of the freehold transfer.

If both points were satisfied, his conclusion was that the transfer should be treated as a nominal-value transaction, below the notification threshold.

The Law

SDLT is charged on land transactions under Part 4 of the Finance Act 2003. The broad charging rule is in section 49.

The amount on which SDLT is calculated is the “chargeable consideration”. That expression is defined through section 50 and Schedule 4 to the Finance Act 2003.

For transfers involving mortgages or other secured debt, Paragraph 8 of Schedule 4 is especially important. It provides that where the purchaser takes property subject to an existing debt, or otherwise assumes liability for debt, the amount of that debt can count as chargeable consideration.

That is why HM Land Registry often raises a requisition where a transfer appears to be linked to an existing charge, a discharge, or a new mortgage. The legal issue is not simply whether money changes hands. It is whether the transferee is taking on debt as part of the land transaction.

There is also an SDLT notification threshold. Broadly, if the chargeable consideration is less than £40,000, the transaction is not notifiable. In that situation, no SDLT return is required and no SDLT is payable.

Analysis

Step one is to separate the value of the leasehold flat from the value of the freehold reversion.

A lender’s valuation of the flat for mortgage purposes may be substantial, but that does not automatically mean the freehold title has the same value. In a small converted building, the freehold may have very limited market value if it produces only nominal ground rent and carries ordinary management obligations.

Step two is to identify what asset is actually being transferred.

Here, the transfer in question is the freehold only. If the leasehold flat remains separately owned and mortgaged, that matters. SDLT is tested by reference to the actual land transaction being carried out.

Step three is to check the mortgage security documents and title registers.

If the existing mortgage is registered only against the leasehold title, then the transfer of the freehold may not involve any assumption of mortgage debt at all. In that case, Paragraph 8 of Schedule 4 may not apply to the freehold transfer.

If, however, the freehold title is itself charged, or the transfer documentation has the effect of the individual taking the freehold subject to debt, that debt may be chargeable consideration even if no cash is paid.

Step four is to value the freehold on a realistic basis.

On the facts described, the freehold appears to carry low annual ground rent and limited economic benefit. That points towards a nominal value rather than a substantial market value. If the transfer is for, say, £100 and no debt is assumed, the chargeable consideration would likely be that nominal sum only.

Step five is to compare that chargeable consideration with the £40,000 notification threshold.

If the total chargeable consideration is below £40,000, the transaction is not notifiable. That means no SDLT return is required and no SDLT is payable.

Step six is to explain the position clearly to the conveyancer and, if needed, to HM Land Registry.

The response usually needs to state why Paragraph 8 of Schedule 4 does not apply on the facts, namely because no debt secured on the freehold is being assumed, and why the freehold consideration is below the notification threshold.

Outcome

If the mortgage is secured only on the leasehold flat and not on the freehold title, and if the freehold is transferred back for only a nominal amount, the likely outcome is that no SDLT is payable and no SDLT return is required because the chargeable consideration is below £40,000.

The main risk is factual rather than legal. If the freehold is in fact charged, or if the transfer involves assumption of debt connected with the freehold, SDLT may arise on the amount of debt assumed.

Practical Steps

1. Obtain official copies of both the freehold title and the leasehold title.
2. Check exactly which title is subject to the existing registered charge.
3. Ask the conveyancer to confirm in writing whether the transfer of the freehold involves any assumption of mortgage debt.
4. Identify the actual consideration stated in the TR1 or related transfer documents.
5. If the freehold has only nominal value, make sure that is reflected consistently in the transfer paperwork.
6. Provide HM Land Registry, through the conveyancer, with a clear explanation that the transfer is either below the SDLT notification threshold or, if applicable, why no chargeable debt is being assumed.
7. If there is any doubt about whether the freehold is charged, have the SDLT position reviewed before completion, because the debt-assumption rules can change the result materially.

Conclusion

A transfer of a freehold from a company back to an individual does not automatically trigger SDLT. The crucial questions are whether the freehold itself has more than nominal value and whether the transferee is taking on debt secured on that freehold. If the freehold is worth only a small amount and no relevant debt is assumed, the transaction is likely to fall below the £40,000 SDLT notification threshold.

Legal References Used

• Finance Act 2003, section 49
• Finance Act 2003, section 50
• Finance Act 2003, Schedule 4
• Finance Act 2003, Schedule 4, Paragraph 8
• HMRC guidance on SDLT and the amount used to calculate what is payable

This page was last updated on 22 March 2026.

See all questions and answers categorized in this sitemap. Or use Google site search below.