As part of our series of articles covering SDLT, we will be looking at some other, more niche areas of SDLT.


Whilst perhaps not commonplace, there will be scenarios where parties agree to exchange real estate with one another, rather than to arrange two separate sales and purchases. For SDLT purposes, whilst intrinsically linked, such exchanges are treated as two separate transactions.

The amount of the chargeable consideration treated as being given by each party, and on which SDLT is chargeable, for each respective acquisition will be the greater of two amounts:

  • the market value of the subject matter of the transaction (i.e. the real estate being acquired); or
  • the value of the consideration given by the buyer (i.e. the value of the real estate being given in exchange plus any cash).

The mechanics of this are best shown by way of examples:

Example 1

Bill and Ben decide to exchange their homes.

Bill's is valued at £875,000, and Ben's is valued at £900,000, so Bill agrees to give Ben £25,000 in cash as well.

Bill pays SDLT on chargeable consideration of £900,000 which is both the value of the subject matter of the transaction (Ben's home) and the value of the consideration he gives to acquire it (his home worth £875,000 and cash of £25,000).

Ben will pay SDLT on chargeable consideration of £875,000. In this case the market value of the subject matter of the transaction (Bill's home) is £875,000. The value of the consideration Ben gives to acquire it, is on the face of it, £900,000, being the value of his current home, so it may be logical to conclude that SDLT is payable on this amount. However, HMRC allows for a just and reasonable apportionment of the consideration given as to £875,000 for the property and £25,000 for the cash received, hence the chargeable consideration of £875,000.

Example 2

Let's assume that a grandmother is looking to downsize and at the same time her grandson is looking to purchase a family home for his growing family. They each like the other's property and the grandmother wants to help her grandson get his dream house.

The grandmother agrees to give her £1,000,000 home to her grandson, in exchange for his £600,000 flat.

The grandson must pay SDLT on consideration £1,000,000 being the market value of the subject matter of the transaction (i.e. Grandma's home) as this is higher than the value of the consideration given by him (i.e. his flat).

The grandmother must pay SDLT on the greater of the market value of the interest acquired (the flat worth £600,000) and the chargeable consideration given (her house worth £1,000,000). As above, the consideration given must be apportioned on a just and reasonable basis between the chargeable consideration given for the flat and the element of gift to her grandson. A just and reasonable apportionment results in the chargeable consideration given being £600,000 and a gift of £400,000. So the grandmother pays SDLT on £600,000.

Property Developers and "Part-Exchange"

Another situation, which is becoming more common, is property developers offering to take properties in part exchange when selling a new home – much like car dealers have been doing for decades.

In these scenarios, the property developer or property trader is exempt from SDLT, provided that certain conditions are met.

In order for the SDLT exemption to apply for the property developer:

  • the property/land being taken in part-exchange must not cover an area of more than half a hectare; and
  • the person who is making the part-exchange must:
    • have lived in the property being exchanged as their only or main home at some point in the preceding two years; and
    • be buying a newly constructed property from the property developer; and
    • intend to occupy the new property as their only or main home.


Where two or more individuals jointly own land and buildings, special SDLT provisions apply where they split ownership of the land and buildings up and then each own a portion of the land or buildings outright.

Whilst this may seem to be very similar to an 'exchange' as discussed above, the SDLT treatment is very different.

Where there is a 'partition', no SDLT will be charged unless one party gives some form of additional consideration to another.

Again, this is best shown by an example:

Two brothers, Andrew and Mark, jointly own 10 acres of farmland in Norfolk. The land is comprised of two fields, A & B, each of 5 acres. For personal reasons (for instance, estate planning) they decide that they would rather each own one of the 5 acre fields outright.

Their objective is met by way of a 'partition' of this land, with Andrew swapping his 50% share of field A with Mark, in return for Mark's 50% share of field B. After the partition, Mark owns 100% of field A, and Andrew owns 100% of field B.

This 'partition' does not give rise to a charge to SDLT because, unlike with an exchange, the value of the share of the interest held by each of the brothers immediately before the partition does not count as chargeable consideration. The chargeable consideration is therefore nil.

This treatment holds regardless of the relative values of each portion of the land or buildings.

If, however, in the example above, Field A contained a cottage, making the value of that land higher and Mark paid Andrew some cash alongside the transfer of his share of field B to equalize the transaction, the cash paid by Mark would be treated as chargeable consideration for SDLT purposes and an SDLT charge could arise.

How can Verfides help?

Our team of experts is ready to help you with:

  • Preparing computations of the SDLT payable for a given real estate acquisition
  • Identifying your residence status for SDLT purposes
  • Advice on structuring the acquisition of real estate to minimise the SDLT payable
  • All aspects of the taxation of UK real estate ownership, acquisition, disposal and succession planning

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.