Inheriting a UK property — by will, intestacy, or as a beneficiary of a trust — does not trigger Stamp Duty Land Tax. The transfer from the estate to you is exempt. But three secondary transactions do trigger SDLT: buying out a co-heir, taking on a mortgage that pays consideration to other heirs, and (indirectly) completing on your own home purchase while you still own a share of the inherited property. The 3% additional-rate surcharge is the most common surprise.
The basic rule: pure inheritance is SDLT-exempt
If you receive a property purely by inheritance — no money or mortgage taken on — there is no SDLT. The transfer from the deceased's estate to the beneficiary is treated as a gift by operation of law, and SDLT only applies to transactions involving "consideration" (money, mortgage, or value exchanged).
This applies whether the inheritance is:
- Outright (you inherit 100% of a property).
- Joint (you inherit a share with siblings or co-beneficiaries).
- Via a deed of variation (an heir voluntarily redirects their share to someone else, within 2 years of death).
Trap 1: Buying out a co-heir
You and your sibling each inherit a 50% share of your parents' house. You want to keep the house; your sibling wants their share in cash. You pay your sibling £300,000 for their 50% share.
This is a sale, and SDLT applies. The "purchase price" is £300,000 (the consideration paid) — even though the property is worth £600,000 in total. SDLT bands apply to £300,000:
- Standard SDLT on £300,000 (£0 to £250,000 at 0%, £250,001 to £300,000 at 5%) = £2,500.
- If you already own a main residence, the 3% surcharge applies to £300,000 = £9,000 — total £11,500.
- If you don't own another residence and intend to live in the inherited property as your main home, no surcharge — just £2,500.
Many heirs are caught out because they think "I'm just keeping the family home" — but in HMRC's eyes, buying the sibling's share is a property purchase.
Trap 2: Taking on a mortgage that pays out other heirs
You and two siblings each inherit a third of a property worth £600,000. You want to keep it; the siblings want their share. You take out a £400,000 mortgage on the house, and use the proceeds to pay your siblings £200,000 each.
SDLT applies to the £400,000 mortgage — that's the consideration you've paid for taking on the other 2/3 of the property (66.67% × £600,000 = £400,000). Standard SDLT plus possibly the 3% surcharge depending on whether you own another residence.
The mortgage itself is the consideration, not the cash paid out — even though the bank is paying, you're now liable for the £400,000 debt. HMRC treats this as identical to handing over £400,000 of your own money.
Trap 3: Completing on a new purchase while holding an inherited share
This is the most common trap. You're in the process of buying a new home. Your relative dies and leaves you a share of their property. The inheritance completes (probate finishes) before your new purchase completes.
At the moment of your purchase completion, you own:
- Your current main residence (the one you're moving out of).
- A share of the inherited property.
- The new property (about to complete).
The 3% surcharge looks at "do you own any other property at the moment of completion?" — yes, both your current main residence AND the inherited share. The replacement-of-main-residence exception covers the current main residence sale. But the inherited share triggers the surcharge — unless you can rely on the partial-interest exception.
The partial-interest exception
HMRC ignores an inherited share of a property for the purposes of the 3% surcharge if all three conditions are met:
- You inherited it within the previous 3 years.
- Your share is less than 50%.
- You haven't actively done anything to acquire more of it (e.g. buying out other heirs).
If you inherited a 30% share two years ago, that share is ignored for the surcharge calculation. If you inherited a 60% share, it's NOT ignored — and the 3% surcharge applies to your new purchase.
Trap 4: The inheritance tax / SDLT timing dance
Inheritance tax is calculated on the date of death; SDLT applies if you later buy or sell shares. The two interact:
- If you sell the inherited property, CGT may apply on any gain since the date of death (not the original purchase price). See the property CGT calculator.
- If you keep the inherited property and rent it out, BTL rules apply — see the BTL guide.
- If you make a deed of variation to redirect the inheritance to a child or charity, no SDLT — provided the variation is made within 2 years of death and meets the formal requirements.
Worked example: typical sibling buyout
Buying out a sibling on the family home
Your parents leave the family home (worth £500,000) to you and your sister, 50/50. You both inherit a 50% share — no SDLT on the inheritance itself. You want to live in the house; your sister wants to be paid out.
You agree she'll receive £250,000 (her 50% share) in exchange for transferring her share to you. You take out a £200,000 mortgage and use £50,000 of your savings to pay her.
SDLT applies on the £250,000 consideration. You don't own another property at the time of completion (you've been renting). You intend the inherited home to be your main residence. So:
- Standard SDLT on £250,000: £0 (the £0–£250,000 band).
- No 3% surcharge (you don't own another property and the inherited home will be your main residence).
- Total SDLT: £0.
If instead you already owned a main residence and were keeping the inherited property as a second home (e.g. to rent out), the calculation would be: standard £0 + 3% surcharge on £250,000 = £7,500.
Deed of variation: a planning tool
A deed of variation lets a beneficiary redirect their inheritance to someone else within 2 years of death, with no SDLT, no CGT, and the variation is read back as if the deceased had made the original bequest. Common uses:
- An adult heir redirects their share to their children (saving on their own IHT and avoiding HICBC if they don't need the asset).
- A spouse redirects part of their share to a charity (claiming charitable IHT relief).
- An heir redirects to an adult who can afford to take on a property without triggering surcharges.
Strict formal requirements: signed by all affected beneficiaries, contains specific HMRC wording (statement that ss.142 IHTA 1984 and 62(6) TCGA 1992 are to apply), and HMRC's IOV2 form is filed if IHT is being adjusted.
Sources and methodology
The mechanics above follow HMRC's SDLT guidance on additional residential property and Schedule 4ZA of the Finance Act 2003. Inheritance tax rules: see HMRC's IHT guidance. Each situation is fact-specific — see the tax adviser recommendation for sibling buyouts, deeds of variation, or trust-held property. The methodology page documents sources and review cadence.
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