Do you need an SDLT return when one beneficiary buys another beneficiary’s share of an inherited property for £95,000?

Introduction

People often search for this issue when HM Land Registry asks for an SDLT5 certificate during registration, even though the amount paid for the property transfer is below the normal Stamp Duty Land Tax threshold. The confusion usually arises because the property originally came through an estate, but the later transfer is a separate deal between the beneficiaries.

The key question is whether that later transfer must be notified to HMRC. If it does not need to be notified, no SDLT return is required and HM Land Registry can usually proceed if given a short explanation with the correct legal references.

The Question

A parent died leaving a dwelling equally to two beneficiaries. Probate was granted, and one beneficiary later agreed to sell their 50% share in the property to the other beneficiary for £95,000. A transfer form was sent to HM Land Registry to register the buyer as sole owner.

HM Land Registry then asked for either:

• an SDLT5 certificate or submission receipt, or
• a letter explaining why no SDLT return was required, with reference to the relevant provisions of the Finance Act 2003.

The issue is whether this transfer must be reported to HMRC, even though the consideration paid was below the residential nil-rate threshold.

Nick’s Explanation

Nick’s reasoning was that the inheritance itself and the later purchase are not the same transaction. The original passing of property under a will may fall within an exemption, but a later sale by one beneficiary to another for money is a separate land transaction.

In anonymised form, his explanation was:

“The later transfer for £95,000 is not the original transfer under the will. It is a separate transaction between beneficiaries for chargeable consideration. Because the consideration does not exceed the residential 0% threshold, and assuming there are no linked transactions, the transaction is not notifiable under section 79 Finance Act 2003. In that case, no SDLT return is required and no SDLT5 certificate is needed.”

He also identified the correct route for replying to HM Land Registry: a short letter stating that the transfer is not notifiable because the chargeable consideration does not exceed the threshold in Schedule 3, paragraph 4(1) Finance Act 2003.

The Law

Stamp Duty Land Tax is charged under the Finance Act 2003 on land transactions in England and Northern Ireland.

The main provisions relevant here are:

• Section 79 Finance Act 2003, which deals with the requirement to notify HMRC of land transactions.
• Schedule 3 Finance Act 2003, which lists exempt transactions and transactions exempt from notification.
• Schedule 3, paragraph 3 Finance Act 2003, which covers transactions effected in pursuance of or in accordance with the terms of a will or intestacy.
• Schedule 3, paragraph 4(1) Finance Act 2003, which provides that certain transactions are exempt from notification where the chargeable consideration does not exceed the 0% SDLT threshold and the transaction is not part of linked transactions exceeding that threshold.

It is important to distinguish between:

• the transfer that happens because of the will itself, and
• a later purchase of one beneficiary’s share by another beneficiary.

The first may fall within the will exemption. The second is usually a separate chargeable land transaction if money is paid.

Analysis

Step one is to identify the transaction being registered. Here, the relevant transaction is not the deceased’s will. It is the later transfer of one beneficiary’s half share to the other beneficiary for £95,000.

Step two is to ask whether the will exemption applies. Under Schedule 3, paragraph 3 Finance Act 2003, a transaction can be exempt if it is effected in pursuance of or in accordance with the terms of a will. But where one beneficiary later buys another’s share for cash, that later purchase is not simply the implementation of the will. It is a new bargain between living parties. So paragraph 3 does not apply to that later purchase.

Step three is to consider whether the transaction must be notified to HMRC. Section 79 Finance Act 2003 requires notification unless an exemption applies. One such exemption is in Schedule 3, paragraph 4(1), which removes the notification requirement where:

• the chargeable consideration does not exceed the relevant 0% threshold, and
• the transaction is not one of a series of linked transactions whose combined consideration exceeds that threshold.

On the facts given, the consideration is £95,000. That is below the residential 0% threshold referred to in Nick’s explanation. If there are no linked transactions, the transfer is not notifiable.

That means there is an important difference between:

• no SDLT being payable, and
• no SDLT return being required.

In this case, the conclusion is stronger than simply saying no tax is due. The point is that the transaction is not notifiable at all, so no SDLT return should be needed.

A further practical point is that HM Land Registry often asks for evidence because, in many transfers for consideration, an SDLT5 would normally be expected. Where no return is required, the application can usually proceed if the applicant provides a letter explaining the statutory reason.

If the buyer owns other residential property at the effective date of the transaction, the higher rates question may need separate consideration. That can affect the tax analysis in some cases. But on the reasoning provided here, the key point for notification is that the consideration is below the relevant threshold and there are no linked transactions.

Outcome

Where one beneficiary buys another beneficiary’s share of an inherited dwelling for £95,000, the transfer is generally a separate land transaction rather than a transfer under the will.

However, if the chargeable consideration does not exceed the residential 0% threshold and there are no linked transactions, the transaction is exempt from notification under Schedule 3, paragraph 4(1) Finance Act 2003.

On that basis:

• no SDLT return is required, and
• no SDLT5 certificate is required.

The usual next step is to send HM Land Registry a letter explaining why the transaction is not notifiable.

Practical Steps

A reader in this position should usually do the following:

1. Confirm the amount of chargeable consideration actually given for the transfer.
2. Check whether there are any linked transactions connected with the same arrangement.
3. Confirm the relevant residential 0% threshold applicable at the effective date of the transaction.
4. Prepare a short letter to HM Land Registry stating that no SDLT return is required because the transaction is not notifiable under section 79 Finance Act 2003, by virtue of Schedule 3, paragraph 4(1) Finance Act 2003.
5. Keep a copy of the transfer, probate papers, and the Land Registry correspondence in case HM Land Registry asks for further clarification.

A suitable form of wording would be:

“In respect of the transfer of the property for consideration of £95,000, the transaction is not notifiable under section 79 Finance Act 2003. The transaction is exempt from notification by virtue of paragraph 4(1) of Schedule 3 Finance Act 2003 because the chargeable consideration does not exceed the applicable 0% residential SDLT threshold, and the transaction is not part of a series of linked transactions whose total consideration exceeds that threshold. Accordingly, no SDLT return has been submitted and no SDLT5 certificate is required.”

Conclusion

A later buy-out between beneficiaries is not normally treated as the inheritance itself for SDLT purposes. But where the consideration is below the relevant 0% residential threshold and there are no linked transactions, the transfer is generally not notifiable. In that situation, the correct response to HM Land Registry is usually a short statutory explanation rather than an SDLT return.

Legal References Used

• Finance Act 2003, section 79
• Finance Act 2003, Schedule 3
• Finance Act 2003, Schedule 3, paragraph 3
• Finance Act 2003, Schedule 3, paragraph 4(1)

This page was last updated on 22 March 2026.

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