‘But no money changed hands’: the SDLT trap in transfers of equity
Summary
The article explains that transfers of equity can trigger SDLT even where no cash changes hands, because taking on responsibility for an existing mortgage may count as chargeable consideration. It highlights that the SDLT position depends on the debt assumed and the wider circumstances of the purchaser, including whether higher rates for additional dwellings may apply.
Why it matters
Residential property surveyors may encounter transactions where the legal form appears simple but the tax implications are not, particularly in family, co-ownership or mortgage-related transfers. Understanding that mortgage assumption can affect SDLT helps surveyors flag issues for clients and coordinate appropriately with conveyancers.
Key points
- No cash payment does not necessarily mean no SDLT liability.
- Assuming responsibility for part of an existing mortgage can be chargeable consideration.
- Transfers of equity often arise in spouse, partner, buyout and family arrangements.
- SDLT rates may also be affected by ownership of other residential property.
- Each transaction needs assessment on its own facts, including the mortgage element.
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