Do you pay Stamp Duty when staircasing a shared ownership property from 75% to 100%?

Introduction

Many shared ownership leaseholders are unsure how Stamp Duty Land Tax (SDLT) works when they buy extra shares in their home. The confusion usually arises when a buyer already owns a large share, wants to staircase to 100%, and is then told by a solicitor or adviser that SDLT is due on the full market value of the property.

In fact, the SDLT treatment depends on the way tax was dealt with when the shared ownership lease was first granted. The key question is whether a market value election was made at the start. If no such election was made, the staircasing rules in Schedule 9 to the Finance Act 2003 usually mean SDLT is charged only on the later staircasing transaction that takes ownership above 80%, and only by reference to the consideration paid for that extra share.

The Question

A first-time buyer acquired a 75% shared ownership interest in a flat in 2018. At that time, the full market value of the property was £215,000 and no SDLT was paid on the original purchase. The buyer now wants to staircase in 2025 by purchasing the remaining 25% share for £60,000, based on a current full market value of £240,000.

The buyer had been told that SDLT of about £2,400 might be payable by reference to the full £240,000 market value. The buyer wanted to know:

• whether SDLT is charged only on the remaining 25% share,
• whether SDLT can somehow be backdated to the 2018 purchase,
• why a solicitor might be quoting SDLT on the full value, and
• whether any proof is needed to show that no SDLT was paid when the lease was first granted.

Nick’s Explanation

Nick’s explanation focused on Schedule 9 to the Finance Act 2003, especially paragraph 4A.

In summary, he explained that where a shared ownership leaseholder staircases and no market value election was made when the lease was first granted, SDLT is not charged retrospectively on the earlier share and is not charged on the full current market value merely because the buyer is reaching 100% ownership.

He explained the key point this way: if the leaseholder staircases from 75% to 100%, the transaction crosses the 80% threshold in paragraph 4A. That means the staircasing acquisition can become chargeable, but only the acquisition that takes the leaseholder above 80% is relevant. On the facts given, the consideration for the final 25% share was £60,000, so that is the figure to test against the SDLT threshold.

Nick also noted that a solicitor who quotes SDLT on the full market value may be assuming that a market value election was made under paragraph 2 or paragraph 4 of Schedule 9 when the lease was first granted. If such an election had been made, the SDLT treatment would be different. But that election must have been included in the original land transaction return and is irrevocable.

As he put it in substance, where no market value election was made, “SDLT applies only on the staircasing that takes your share above 80%”. On the figures provided, because the consideration for that acquisition was below the residential SDLT threshold, no SDLT was due.

The Law

The relevant rules are in Schedule 9 to the Finance Act 2003, which deals with shared ownership leases for SDLT purposes.

There are two main ways SDLT can apply at the outset of a shared ownership lease:

• tax can be dealt with under the normal shared ownership rules without a market value election, or
• the buyer can elect for SDLT to be charged on the full market value at the start.

If a market value election is made, it must be included in the SDLT return for the grant of the lease. Paragraph 2(3) and paragraph 4(3) provide that the election is irrevocable.

Where no market value election is made, later staircasing is dealt with under paragraph 4A of Schedule 9.

Paragraph 4A(1) applies where the leaseholder has the right, on payment of a sum, to require the lease terms to be altered so that rent is reduced and the leaseholder acquires an additional interest.

Paragraph 4A(2)(b) provides that an acquisition is exempt from charge if immediately after the acquisition the total share of the dwelling held by the lessee does not exceed 80%.

The practical effect is:

• staircasing transactions that do not take the leaseholder above 80% are exempt, and
• once a staircasing transaction takes the leaseholder above 80%, that acquisition is the potentially chargeable one.

That does not mean HMRC charges SDLT again on the earlier shares, and it does not automatically mean the whole market value of the property is taxed at that later stage.

Analysis

Step 1: identify whether a market value election was made when the lease was first granted.

This is the first and most important question. If a market value election was made at the outset, SDLT would have been dealt with on the full market value then, and later staircasing generally would not trigger further SDLT in the same way. If no market value election was made, the later staircasing rules in paragraph 4A apply.

On the facts here, the buyer said no SDLT was paid in 2018 and first-time buyer relief was claimed. That strongly suggests there was no market value election.

Step 2: work out whether the current staircasing takes the buyer above 80%.

The buyer already owns 75% and wants to acquire the remaining 25%. Immediately after the acquisition, the buyer will own 100%. That means the transaction crosses the 80% threshold.

Step 3: identify the chargeable transaction.

Because the current staircasing takes ownership above 80%, this is the only relevant staircasing acquisition for SDLT purposes under paragraph 4A on the facts given. There is no charge on the original 75% share now, and there is no backdating of SDLT to the earlier purchase simply because the buyer is now staircasing to 100%.

Step 4: identify the chargeable consideration.

The consideration for the current acquisition is the amount paid for the extra 25% share. On the figures provided, that is £60,000.

Step 5: apply the SDLT threshold in force at the effective date of the staircasing transaction.

If the relevant residential SDLT threshold is £125,000, then consideration of £60,000 falls below that threshold. On those figures, the chargeable transaction produces no SDLT liability.

Step 6: consider why a different view may have been suggested.

A solicitor quoting SDLT on the full £240,000 may be misunderstanding the shared ownership rules, or may be assuming there was an earlier market value election. If that assumption is wrong, then charging SDLT by reference to the full market value at the staircasing stage is not consistent with the legislation discussed above.

It is also worth noting that this is not an “uninhabitable” or “not suitable for use” issue. In those cases, the condition thresholds are now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. That authority is relevant to different SDLT questions about whether a property counts as residential, but it does not alter the shared ownership staircasing analysis here.

Outcome

On the facts described, the practical conclusion is:

• there is no retrospective SDLT charge on the earlier 75% share,
• SDLT is not charged on the full current market value merely because the buyer is staircasing to 100%,
• the relevant amount is the £60,000 paid for the final 25% share, and
• if the applicable residential SDLT threshold is £125,000, no SDLT is payable because £60,000 is below that threshold.

Practical Steps

If you are in a similar position, the sensible next steps are:

1. Check the original SDLT return and purchase papers for the shared ownership lease.
2. Confirm whether a market value election was made under Schedule 9, paragraph 2 or paragraph 4 of the Finance Act 2003.
3. If no election was made, refer your conveyancer to Schedule 9, paragraph 4A, especially paragraph 4A(2)(b).
4. Make sure the consideration for the staircasing transaction is correctly identified as the amount paid for the additional share.
5. Check the SDLT threshold in force on the effective date of the staircasing transaction.
6. If needed, provide the original SDLT5 certificate or completion statement to show how the original transaction was reported.

Where there is disagreement, it often helps to ask the conveyancer to explain in writing whether they believe a market value election was made, and if so, what evidence they rely on.

Conclusion

For a shared ownership leaseholder staircasing from 75% to 100%, the SDLT answer usually turns on whether a market value election was made when the lease was first granted. If no election was made, the later staircasing transaction that takes ownership above 80% is the relevant acquisition, and SDLT is tested by reference to the amount paid for that extra share. On a £60,000 staircasing payment, that means no SDLT is due if the applicable threshold is £125,000.

Legal References Used

• Finance Act 2003, Schedule 9
• Finance Act 2003, Schedule 9, paragraph 2
• Finance Act 2003, Schedule 9, paragraph 2(3)
• Finance Act 2003, Schedule 9, paragraph 4
• Finance Act 2003, Schedule 9, paragraph 4(3)
• Finance Act 2003, Schedule 9, paragraph 4A
• Finance Act 2003, Schedule 9, paragraph 4A(1)
• Finance Act 2003, Schedule 9, paragraph 4A(2)(b)
• 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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