Will Trusts, Inherited Shares and Higher‑Rate SDLT / LTT
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Do trustees pay SDLT when a deceased person’s share of a home is transferred into a will trust?
Introduction
This is a common question where a deceased person owned part of a home as a tenant in common and their Will says that their share must pass into a trust. Families often want to know whether the transfer into the trust triggers Stamp Duty Land Tax (SDLT), whether an SDLT return is needed, and whether acting as a trustee or future beneficiary could affect higher rates on a later property purchase.
The answer usually turns on two points: whether the transfer happens by inheritance, and whether there is any chargeable consideration such as money being paid or mortgage debt being taken on. Where a deceased person’s share passes into a will trust under the Will, and there is no mortgage and no payment, the transfer is generally exempt from SDLT.
The Question
A parent owned a 50% share in a residential property as tenant in common with the surviving spouse. After the parent’s death, the Will directed that the deceased’s 50% share should be held in a will trust. Two adult children were appointed as trustees. The surviving spouse had a right to live in the property for life, and the family members were beneficiaries under the Will.
The trust had already been set up and registered. The remaining step was to transfer the deceased’s 50% share into the names of the trustees at HM Land Registry so that the title reflected the trust arrangement. There was no mortgage on the property and no money or other consideration was being given for the transfer.
The questions were:
- Does the transfer into the will trust give rise to SDLT?
- If no SDLT is payable, does an SDLT return still need to be filed?
- Does the higher rate of SDLT apply because one trustee already owns a home?
- Does being a trustee or possible future beneficiary affect a later purchase of a home in Wales for Land Transaction Tax (LTT) purposes?
Nick’s Explanation
Nick’s core view was that the transfer of the deceased’s share into the will trust is exempt from SDLT where it happens under the Will and there is no consideration.
In anonymised form, his reasoning was:
- Under section 49 FA 2003, a land transaction is chargeable only if it is not exempt.
- Schedule 3 FA 2003 exempts acquisitions by inheritance.
- Where the deceased’s share passes under the Will into the trust, and there is no money and no debt being assumed, no SDLT is payable.
- Under section 77A FA 2003, an exempt transaction is generally not notifiable, so no SDLT return is required in that scenario.
On higher rates, Nick explained that the surcharge under Schedule 4ZA FA 2003 applies to a purchase of a major interest in a dwelling. A transfer by inheritance is not a purchase for SDLT purposes because there is no chargeable consideration under section 50 FA 2003. On that basis, the transfer into the will trust does not itself trigger the higher rates.
He also explained that if a person later buys a property in Wales, the Welsh higher rates regime may still need separate consideration. In particular, an inherited or trust-related interest can matter when testing whether the buyer already owns another dwelling. The exact Welsh result depends on the nature of the person’s interest at the time of the Welsh purchase.
The Law
The starting point is Part 4 of the Finance Act 2003.
Section 42 FA 2003 provides that SDLT is charged on land transactions.
Section 49 FA 2003 makes clear that a land transaction is chargeable only if it is not exempt.
Section 50 FA 2003 defines chargeable consideration. In broad terms, SDLT normally depends on there being consideration, such as money paid, debt assumed, or some other value given.
Schedule 3 FA 2003 lists exempt transactions. Paragraph 3 exempts acquisitions by inheritance.
Section 77A FA 2003 deals with notifiable transactions. Exempt transactions are generally not notifiable, so an SDLT return is not usually required where the transaction is exempt and there is no separate reason for notification.
Schedule 4ZA FA 2003 contains the higher rates for additional dwellings. Those rules apply where there is a purchase of a major interest in a dwelling and the statutory conditions are met.
So, in a probate and will trust context, the key legal question is whether the transfer is truly an acquisition by inheritance and whether there is any chargeable consideration.
Analysis
Step one is to identify what is actually being transferred. Here, the deceased’s 50% share in the property is being vested in the trustees because the Will says that share is to be held on trust. That is part of the administration of the estate and implementation of the Will.
Step two is to ask whether the transfer is made for consideration. On the facts given, there is no payment, no mortgage, and no other debt being taken over. That matters because SDLT usually depends on chargeable consideration. If there is no consideration, there is normally no SDLT charge unless a specific deeming rule applies.
Step three is to consider the inheritance exemption. A transfer of the deceased’s property under the Will into the will trust is generally treated as an acquisition by inheritance within Schedule 3 paragraph 3 FA 2003. That means the transaction is exempt.
Step four is to consider notification. Because the transaction is exempt, section 77A FA 2003 means it is generally not notifiable. In practical terms, that usually means no SDLT return is required where the transfer is solely to give effect to the Will and there is no consideration.
Step five is to consider higher rates. The higher rates in Schedule 4ZA FA 2003 apply to a purchase. This transfer is not a purchase in the ordinary SDLT sense. It is an inheritance-based vesting into trustees under the Will, with no chargeable consideration. So the higher rates do not arise on this transfer itself.
That remains so even if one of the trustees already owns their own home. Acting as trustee on an inheritance-based transfer does not convert the transaction into a chargeable purchase.
The more difficult question is what happens later if one of the individuals buys another property. For SDLT or LTT higher-rates purposes, the legislation looks at what property interests the buyer holds at the effective date of their purchase. Whether a person is merely a trustee, or also has a beneficial interest, can matter. So can the detailed trust terms, including any life interest and the nature of any remainder interests.
On the facts described here, the adult children were said not to have inherited a direct share in the property itself, but to be trustees, with the surviving spouse holding a lifetime right to occupy and the capital passing later under the trust terms. That is materially different from a simple direct inheritance of a beneficial share in the dwelling. It means the later higher-rates analysis for a future purchase may be more nuanced than if the individuals had inherited the property personally.
For a future purchase in Wales, LTT uses its own statutory tests. Although the Welsh higher rates broadly mirror the SDLT approach, the result depends on the exact beneficial interests held at the time of the Welsh purchase. If a person does not own a relevant beneficial interest in a dwelling personally, and is only acting as trustee, that may lead to a different answer from the case where they directly inherited a share. The trust deed, the Will, and the nature of the life interest and remainder interests all need to be checked carefully.
If anyone is considering arguing that a property should be ignored because it is uninhabitable or not suitable 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. Ordinary disrepair, dated condition, or a need for renovation will often not be enough.
Outcome
On the facts described, the practical conclusion is:
The transfer of the deceased’s 50% share into the will trust is generally exempt from SDLT as an acquisition by inheritance under Schedule 3 FA 2003.
No SDLT should be payable if there is no money, no mortgage debt, and no other chargeable consideration.
No SDLT return is generally required for that exempt transfer.
The higher rate of SDLT does not apply to that transfer itself, because it is not a chargeable purchase.
Any later purchase by a trustee or beneficiary, especially in Wales for LTT purposes, needs a separate review based on the exact trust interests they hold at that time.
Practical Steps
Check the Will and trust wording carefully to confirm whether the individuals hold any personal beneficial interest in the dwelling now, or are acting only as trustees.
Confirm there is no mortgage, no debt assumption, and no payment or other consideration connected with the transfer.
Make sure the conveyancer understands that the transfer is being made to implement the Will and vest the deceased’s share in the trustees.
Ask the conveyancer to confirm in writing whether the transaction is being treated as exempt under Schedule 3 paragraph 3 FA 2003 and therefore non-notifiable under section 77A FA 2003.
If a trustee or beneficiary plans to buy a home later, obtain a separate higher-rates review before exchange, especially for a purchase in Wales under LTT.
For any future higher-rates analysis, gather the Will, trust documents, title documents, and details of who has the life interest, who has any remainder interest, and whether anyone has a present beneficial share.
Conclusion
Where a deceased person’s share of a home is transferred into a will trust under the Will, with no mortgage and no payment, the transfer is generally exempt from SDLT and usually does not require an SDLT return. The higher rates do not apply to that inheritance-based transfer itself. However, any later purchase by a trustee or beneficiary should be reviewed on its own facts, because the trust structure may affect higher-rates treatment for SDLT or LTT.
Legal References Used
Finance Act 2003, section 42
Finance Act 2003, section 49
Finance Act 2003, section 50
Finance Act 2003, section 77A
Finance Act 2003, Schedule 3, paragraph 3
Finance Act 2003, Schedule 4ZA
Finance Act 2016
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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