Joint property ownership – Don’t get caught out by SDLT!

pound coin graphicThe re-organisation of buy to let portfolios into joint names with a spouse or civil partner has become fairly common practice since changes were made to the taxation of residential property income.

Likewise, many have considered transferring whole portfolios from a working spouse into the sole name of the non-working spouse or partner in order to benefit from tax allowances.

Whilst for Capital Gains Tax (CGT) and Income Tax purposes the potential savings can be attractive, Stamp Duty Land Tax (SDLT) is often overlooked.


branded icon of notebook from menziesAs far as SDLT is concerned there is a common misconception that transfers between spouses are exempt from paying SDLT. Unfortunately there is no such exemption (other than for transactions entered into in contemplation or connection with divorce!).


Accordingly whilst a transfer into joint names may be considered desirable because of the ability to split income and gains between spouses, perhaps making use of lower bands and a second CGT annual exemption, any such transfer may give rise to an upfront SDLT cost. Therefore the income tax and/or CGT saving will need to be weighed up against this.


Another common misconception is that if nothing is actually ‘paid’ by the other party on the transfer of the property into joint names no SDLT can arise. The basic rule on a transfer of a property is that SDLT is payable on the amount of chargeable consideration given for the transfer.


Chargeable consideration includes the assumption of debt or other liabilities. This specifically includes the situation where there is a loan or mortgage secured on the property and a joint owner is being added to the mortgage. HMRC practice is to tax the amount of mortgage assumed in accordance with the beneficial interest being acquired.

Richard Turner - Menzies Accountant

For example; Philip owns a residential property with a mortgage secured on it of £200,000, if he transfers 50% to Theresa and she is added to the mortgage she is deemed to have given £100,000 of chargeable consideration and SDLT will be calculated on this amount.

Ordinarily if Theresa does not own any other residential property no SDLT will be due because it is below the SDLT threshold of £125,000. However if this is Theresa’s second residential property the SDLT surcharge is likely to apply and therefore SDLT of £3,000 would be due.

Note: for the 3% SDLT surcharge properties owned by one spouse are deemed to be owned by the other even if NOT in joint names!

Future tax savings could outweigh the initial SDLT cost but property owners need to be aware of this to avoid a nasty surprise!

There are ways to structure property ownership in order to minimise the overall tax burden between joint owners, which we would be happy to discuss with you. Please contact Richard Turner on or any member of the Menzies property team.

Find out more about Menzies Property and Construction services.

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