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The Finance Act 2018 introduced specific exemptions for spousal transfers, including relief from the higher-rate SDLT surcharge for additional properties. This guide explains the rules, exemptions, and calculations, with illustrative examples to help property owners navigate the process efficiently.
Stamp Duty Land Tax (SDLT) is a tax on property and land transactions in England and Northern Ireland. It applies not only to property purchases but also to transfers where consideration, such as payment or assumption of mortgage debt, is involved.
Transfers involving no consideration—such as payments or mortgage assumptions—are treated as gifts and are exempt from SDLT.
SDLT is not payable if the consideration (e.g., the share of a mortgage) is £125,000 or less. However, an SDLT return must still be submitted to HMRC if the consideration exceeds £40,000.
Spousal transfers are exempt from the 5% higher-rate SDLT surcharge for additional properties, as specified in the Finance Act 2018.
The exemption from the higher-rate SDLT surcharge for spousal transfers is provided in Schedule 4ZA, Paragraph 3 of the Finance Act 2003, as amended by the Finance Act 2018.
A purchase is not a higher rates transaction if the only reason the buyer would otherwise be treated as having a major interest in an additional dwelling is that they are treated as owning the seller’s interest by virtue of section 53 of the Finance Act 2003 (spouses or civil partners treated as one unit).
What This Means: This clause exempts property transfers between spouses or civil partners from the 5% higher-rate SDLT surcharge, even if the couple collectively owns multiple properties. However, standard SDLT thresholds still apply, and any consideration above £125,000 will attract SDLT at the regular rates.
Scenario: A property investor wins a property at auction and needs £500,000 to complete the purchase within 28 days. Solution: Glenhawk provides quick approval and funding, enabling the investor to meet the auction deadline.
Scenario:
Jane owns a Buy-to-Let property valued at £300,000 with a £150,000 mortgage. She transfers 50% of the property to her spouse, John.
Calculation:
Consideration: 50% of the mortgage = £75,000.
Threshold: £75,000 is below the £125,000 SDLT threshold.
Outcome:
SDLT Payable: £0.
SDLT Return Required: Yes, as the consideration exceeds £40,000.
Scenario:
David owns a Buy-to-Let property valued at £500,000 with a £300,000 mortgage. He transfers 50% of the property to his spouse, Sarah.
Calculation:
Consideration: 50% of the mortgage = £150,000.
Threshold: £150,000 exceeds the £125,000 SDLT threshold.
SDLT Calculation:
Taxable Amount: £150,000 – £125,000 = £25,000.
SDLT Payable: £25,000 x 5% = £1,250.
Outcome:
SDLT Payable: £1,250.
SDLT Return Required: Yes.
Scenario:
Emma owns a Buy-to-Let property worth £200,000 outright (no mortgage). She transfers 100% ownership to her spouse, Tom.
Calculation:
Consideration: £0 (no mortgage or payment).
Threshold: Not applicable.
Outcome:
SDLT Payable: £0.
SDLT Return Required: No, as no consideration is involved.
Scenario:
Sarah and Mark co-own a Buy-to-Let property valued at £600,000 with a £400,000 mortgage. Sarah transfers her 50% share to Mark.
Calculation:
Consideration: 50% of the mortgage = £200,000.
Threshold: £200,000 exceeds the £125,000 SDLT threshold.
SDLT Calculation:
Taxable Amount: £200,000 – £125,000 = £75,000.
SDLT Payable: £75,000 x 5% = £3,750.
Outcome:
SDLT Payable: £3,750.
SDLT Return Required: Yes.
Higher-Rate SDLT Exemption: Spousal transfers are not subject to the 5% surcharge.
Threshold Awareness: SDLT is only payable if consideration exceeds £125,000.
SDLT Return Requirement: File a return for considerations above £40,000, even if no tax is due.
Seek Advice: Always consult a solicitor or tax advisor to ensure compliance and maximise tax efficiency.
Professional advice is key to navigating complex SDLT rules and ensuring compliance with HMRC requirements. With proper planning, spousal transfers can be both financially and administratively beneficial.
No. SDLT is only exempt if there is no consideration (e.g., no mortgage or payment). For transfers with consideration above £125,000, SDLT is payable.
No. Spousal transfers are exempt from the higher-rate SDLT surcharge, regardless of the number of properties owned.
Consideration typically includes the share of outstanding mortgage debt or any monetary payment made during the transfer
An SDLT return must be submitted to HMRC if the consideration exceeds £40,000, even if no tax is due.
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