Do you pay SDLT when two neighbours swap pieces of land and no money changes hands?

Introduction

People often assume that Stamp Duty Land Tax (SDLT) only applies if money is paid. That is not always right. A common area of confusion is where two owners rearrange boundaries or swap parts of their land so that each property is laid out more sensibly, but no cash changes hands and neither side appears to gain overall.

In that situation, the key question is not whether anyone is better or worse off in practical terms. The legal question is whether there has been a land transaction for SDLT purposes and, if so, whether there is chargeable consideration. In an exchange of land, the answer is often yes.

The Question

Two adjoining property owners want to alter their boundary arrangements. Each will transfer a piece of land to the other so that the plots work better in practice. Overall, each owner believes they will still hold broadly the same amount of land as before, just in a different shape.

No money will be paid by either side. A surveyor has valued the interests being transferred at around £69,000 each, although there is concern that the valuation may be difficult because the property interests are unusual and may have a limited market. The owners want to know:

• whether this is an exempt transaction because no money changes hands;
• whether an SDLT return is required; and
• whether the solicitor would normally deal with the SDLT filing.

Nick’s Explanation

Nick’s core point is that SDLT does not depend on whether cash is paid or whether, in everyday terms, anyone has gained or lost overall. What matters is whether there is a land transaction and whether consideration exists for SDLT purposes.

As Nick explains, where each party gives land in return for land, that is an exchange. In that situation, the legislation treats each party as acquiring land for consideration, even if no money passes between them.

In anonymised form, his explanation was:

“Even though no cash changes hands, this is still considered an exchange of land under Section 47 FA 2003. There is consideration because each party is receiving land from the other. The ‘no money, no payment’ exemption does not apply where land is being exchanged.”

He also noted that SDLT is based on the market value of the land received in an exchange. On the facts given, if the market value is £69,000 for each acquisition, the transaction is notifiable. If a properly supported revised valuation brought the relevant figure below £40,000, a return would generally not be required.

On the practical side, Nick explained that the conveyancing solicitor would usually prepare and submit the SDLT return as part of the conveyancing and registration process, but that should always be confirmed directly with the solicitor handling the matter.

The Law

SDLT is charged under the Finance Act 2003 on land transactions involving chargeable interests in land.

For most transactions, the tax position depends on the chargeable consideration given for the acquisition. Consideration is not limited to money. It can include money’s worth, the assumption of debt, or the transfer of other property.

In an exchange of land, Section 47 of the Finance Act 2003 is especially important. It provides special rules for exchanges, and the broad effect is that each acquisition is treated separately. Each party is treated as giving consideration for what they receive, even though the consideration is not cash but the property transferred in return.

For SDLT purposes, the value used in an exchange is generally the market value of the chargeable interest acquired. So if one owner receives a parcel of land worth £69,000, that market value is the relevant consideration for that owner’s acquisition.

Whether a return must be filed is a separate issue from whether any SDLT is actually payable. A transaction can be notifiable even if the tax due is nil. Broadly, if the chargeable consideration for a land transaction is less than £40,000, the transaction is generally not notifiable. If it is £40,000 or more, a return is normally required unless a specific exception applies.

Analysis

Step one is to identify whether there is a land transaction. Here, there is. Each owner is transferring part of their land to the other.

Step two is to ask whether there is consideration. The answer is also yes. Although no money is changing hands, each party is giving land in exchange for land. That is consideration for SDLT purposes.

Step three is to consider whether the “no money or other payment” wording sometimes seen in HMRC guidance helps. In a true gift, where absolutely nothing is given in return, that point may be relevant. But it does not apply to a land swap. In a land exchange, what is received from the other party is itself the consideration.

Step four is valuation. In an exchange, the relevant value is generally the market value of the land acquired. If the current evidence supports a value of £69,000 for each parcel acquired, then each party has a notifiable land transaction based on that amount.

Step five is to separate notification from liability. A transaction valued at £69,000 may still produce no SDLT payable depending on the rates and the nature of the property, but it would still normally need to be reported because it exceeds the £40,000 notification threshold.

Step six is to consider whether a lower valuation could change the filing position. If there is a properly reasoned, defensible valuation showing that the market value of the land acquired by each party is below £40,000, the transaction would generally cease to be notifiable. That would mean no SDLT return would usually be required. The valuation would need to be robust, especially where the interest is unusual or difficult to market.

The fact that the interests are awkward to value, or may be unattractive to ordinary buyers, can be relevant to market value. But that is an evidence point, not a legal exemption. It does not change the rule that an exchange is still consideration for SDLT purposes.

Outcome

Where two owners swap pieces of land, SDLT rules usually treat that as an exchange, not as an exempt no-payment transaction. Even if no cash changes hands and the rearrangement leaves both properties broadly equal overall, each side is still acquiring land for consideration.

On the facts described, if the market value of the land each party receives is £69,000, each acquisition is normally notifiable to HMRC and an SDLT return should usually be filed. If a revised professional valuation genuinely reduces the relevant value below £40,000, the filing requirement may fall away.

Practical Steps

1. Ask the conveyancer to confirm whether the transaction is being treated as an exchange under Section 47 Finance Act 2003.
2. Obtain a clear written valuation of the land or property interest being acquired by each party, with reasons and comparable evidence where possible.
3. Check whether the valuation relied on is the market value of the land received, not simply a broad estimate of the overall arrangement.
4. Consider whether the valuation genuinely supports a figure below £40,000. If it does, ask the conveyancer whether the transaction is therefore non-notifiable.
5. If the value is £40,000 or more, ensure an SDLT return is prepared and filed on time even if no tax is ultimately payable.
6. Confirm in writing whether the solicitor will submit the SDLT return as part of the conveyancing. Do not assume it will happen automatically.
7. Keep the plans, valuation evidence, transfer documents and any advice on file in case HMRC later asks how the value was reached.

Conclusion

No cash changing hands does not, by itself, make a land swap exempt from SDLT. If each party gives land and receives land in return, that is usually an exchange with chargeable consideration based on market value. The main practical issue is therefore valuation, because that may determine whether the transaction must be reported to HMRC.

Legal References Used

• Finance Act 2003
• Finance Act 2003, Section 47
• HMRC guidance on SDLT and notifiable transactions

This page was last updated on 22 March 2026.

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