Transfer of Equity Stamp Duty Calculator

How to use this calculator

1. Enter the outstanding mortgage, not the original loanThe consideration is based on the debt actually being taken on, which is the current balance rather than what was originally borrowed.
2. Add any cash actually paidIf the incoming person is paying for their share as well as taking on debt, both count toward the consideration.
3. Tick the divorce box if a court order appliesTransfers under a court order on divorce, dissolution or separation are exempt regardless of the consideration.
4. Check whether the surcharge appliesIf the person receiving the share already owns property, the additional property surcharge is charged from the first pound — often the largest item.

Charged on the debt, not on the value

The instinct is that adding someone to the deeds of a £400,000 house gives them £200,000 of property, so stamp duty must be charged on £200,000. That is wrong, and the correct answer is usually much cheaper.

SDLT is charged on chargeable consideration — what is actually given in exchange. On a transfer of equity that is normally the share of the outstanding mortgage that the incoming person becomes liable for, plus any cash they pay.

So if the property is worth £400,000 with a £250,000 mortgage and half is transferred, the consideration is £125,000 of debt assumed, not £200,000 of value received.

The consequence is that a mortgage-free property transferred for no payment attracts no SDLT at all. A parent adding a child to the deeds of a debt-free house worth a million pounds pays nothing, provided no money changes hands and no debt is assumed.

That is a genuine and widely missed feature of the rules.

The corollary is that a large mortgage can create a real charge. Half of a £600,000 mortgage is £300,000 of consideration, which attracts meaningful SDLT even though nobody paid anything in cash.

The additional property surcharge changes the picture sharply where it applies. It is charged from the first pound rather than only above the normal threshold, so a transfer of equity involving someone who already owns a property can attract SDLT on a consideration that would otherwise be entirely within the nil rate band.

That catches out couples where one partner owns a flat they are letting out, and it is the most common way an apparently free transfer becomes expensive.

Divorce and dissolution are the significant exemption. Where the transfer is made under a court order or a formal agreement in connection with the ending of a marriage or civil partnership, it is exempt from SDLT regardless of the consideration. Most matrimonial transfers therefore escape entirely.

Worked example: half of a £400,000 house with a £250,000 mortgage

The share being transferred is worth £200,000. That figure is not what is taxed.

The chargeable consideration is half the mortgage: £250,000 × 50% = £125,000.

At the standard residential bands, £125,000 falls entirely within the nil rate band, so no SDLT is due at all.

If SDLT had been charged on the £200,000 value of the share instead, it would have been £1,500 — so the rule as it actually works saves the whole amount here.

Now tick the additional property box. The person coming onto the deeds already owns a flat. The 5% surcharge applies from the first pound: £125,000 × 5% = £6,250.

So the same transfer costs nothing in one case and £6,250 in the other, purely because of what the incoming person already owns. That is worth checking before the paperwork is drawn up, and there are sometimes ways to structure or time it differently.

Now raise the mortgage to £600,000 on a £900,000 property, transferring half. The consideration is £300,000, which attracts £5,000 at the standard bands — £2,500 in the 2% band and £2,500 in the 5% band — and £20,000 if the surcharge applies.

Now the divorce case. If the transfer is made under a court order on divorce, none of the above applies. The consideration could be £300,000 and the SDLT would still be nil.

One more common scenario: a parent transferring a half share in a mortgage-free property worth £500,000 to a child, for no payment. Consideration is nil, so SDLT is nil, whatever the value and whether or not the child owns another property — because the surcharge applies to consideration, and there is none.

That scenario has other tax consequences, though. It is a disposal for capital gains tax if the property is not the parent's main residence, and it is a potentially exempt transfer for inheritance tax, needing the parent to survive seven years. SDLT is often the smallest of the three considerations.

SDLT on common transfers

The first row is the rule most people do not know: a mortgage-free transfer for no payment costs nothing in SDLT, whatever the property is worth. The surcharge column is the one to check carefully, because it turns several no-tax transfers into four and five figure bills — and it applies from the first pound rather than above the threshold.

Returns, lenders and the other taxes

A land transaction return is normally required where the consideration exceeds the notification threshold, even if no tax is payable. Missing it attracts a penalty regardless of the tax position, and the deadline is short — currently 14 days from the effective date.

Where the consideration is nil there is generally nothing to notify, but a conveyancer should confirm that rather than assuming it.

The lender's consent is the practical bottleneck. A transfer of equity on a mortgaged property cannot proceed without it, and lenders will underwrite the remaining or new borrower as they would any applicant. A transfer that reduces the number of income earners on the mortgage is frequently refused, which is a common obstacle in separations.

In practice most transfers of equity involve a remortgage rather than a simple consent, which brings arrangement fees, valuation fees and possibly early repayment charges on the existing deal.

Conveyancing costs are modest for a straightforward transfer — usually a few hundred pounds plus Land Registry fees — but they rise where a lender, a trust or a declaration of trust is involved.

The other taxes often matter more than SDLT. Transferring a share in a property that is not your main residence is a disposal for capital gains tax at market value between connected persons, even if no money changes hands. Transfers between spouses and civil partners living together are on a no gain, no loss basis, which is why spousal transfers are so much simpler.

For inheritance tax, a gift of a share is a potentially exempt transfer, falling out of the estate after seven years — unless the giver continues to benefit from the property, in which case the gift with reservation rules can pull it back in. A parent transferring a share of the home they still live in needs advice on this specifically.

A declaration of trust setting out the beneficial shares is worth having whenever ownership is unequal or contributions differ, and for married couples wanting to be taxed on rental income other than 50:50, a Form 17 declaration is required alongside it.

Scotland charges Land and Buildings Transaction Tax and Wales charges Land Transaction Tax, both with their own bands, their own surcharges and their own first-time buyer treatment. The consideration principle is broadly similar but the thresholds are not.

Assumptions and limitations

• Bands, surcharge and first-time buyer thresholds change — check GOV.UK and override
• Applies to England and Northern Ireland — Scotland and Wales use different taxes
• Does not calculate capital gains tax on the transfer, which is often larger
• Does not model inheritance tax or the gift with reservation rules
• Does not model linked transactions or multiple dwellings
• Assumes the whole outstanding mortgage is apportioned by the share transferred
• Not tax or legal advice — use a conveyancer for the transaction itself

Questions people ask about this in United Kingdom