Stamp Duty on Gifted Property: Do You Pay SDLT When You Gift a Property?

You do not pay stamp duty when you gift a property outright and get nothing back for it. Stamp duty is charged on what the person receiving the property gives you, and a genuine gift has no price, so gifting a house or flat to your children, your parents or anyone else produces an SDLT bill of nil however much the property is worth.

There is one exception, and it is the common trap. If the person you are giving the property to takes over your mortgage, the balance they take on counts as what they paid for it. Stamp duty is then charged on that balance at the 2026/27 residential rates, with the 5% additional dwellings surcharge on top if they already own a home.

Stamp duty is also the smallest of the taxes on a property gift, which is exactly why gifts go wrong. Giving a property to a family member hands you a capital gains tax bill, worked out as though you had sold at full market value even though not a penny changed hands. It starts a seven-year inheritance tax clock, which never starts at all if you carry on living in the property. And if you gift a rental property to a child under 18, the rent is still taxed on you.

This page answers the stamp duty question first, then works through the capital gains tax charge on you as the giver, the inheritance tax clock, the traps that stop it running, care fees and the income tax rules, with worked examples throughout.

One point on paperwork before the tax. A deed of gift is the document that records the transfer of a property from you to someone else for nothing in return. You cannot give land away verbally: Law of Property Act 1925 s.52 requires a deed for any transfer of a legal estate in land. Once the deed is signed and the change is registered at HM Land Registry using a TR1 form, the gift is complete.

What the deed will not do is cut your tax bill. Its value is that it proves things: it fixes the date the gift took effect, and it evidences that you gave the property away with no strings attached. Every tax figure on this page hangs off that date. For the capital gains mechanics in full technical detail, see our companion page on CGT on gifting property to family members. For the wider portfolio picture, see our portfolio landlord tax planning guide.

Do you pay stamp duty on gifted property?

No. A pure gift of property carries no stamp duty at all, because there is nothing for SDLT to bite on. Stamp duty is charged on the chargeable consideration, which is the value of everything the person receiving the property gives you in return. On an outright gift that figure is zero, and a transaction with no chargeable consideration is exempt under FA 2003 Sch 3 para 1. Where nothing passes in the other direction, you have no SDLT to pay and no SDLT return to file.

The SDLT on gifted property does not depend on who you are gifting to. Gifting property to your children, your grandchildren, your brother, your parents or a friend gives the same answer. It does not depend on the value either: a gifted property worth £1.2m attracts no more stamp duty than one worth £120,000, which is nil in both cases. And it makes no difference that the person receiving it already owns a house, because the 5% additional dwellings surcharge is a percentage of the price paid, and on a gift there is no price to take a percentage of.

What turns that nil bill into a real one is anything of value coming back to you. Three things do it:

• The person receiving the property takes over the outstanding mortgage. This is by far the most common trigger and the rest of the next section deals with it.
• They pay you cash for part of the value, so what you have is part gift and part sale. Stamp duty is charged on the cash element.
• They agree to take on some other obligation that can be measured in money, for example settling a debt you owe or paying for works.

If you want a clean nil result on a gifted property, the practical move is to clear the mortgage before you transfer. Redeem the loan first, gift the unencumbered property second, and nothing is assumed by anyone.

Is stamp duty payable on a gifted property with a mortgage?

Yes. Where the person receiving the property takes over the outstanding mortgage, that balance is chargeable consideration and stamp duty is charged on it. The statutory authority is FA 2003 Sch 4 para 8(1)(b): debt released or assumed by the purchaser is treated as chargeable consideration. Standard residential SDLT rates then apply to the amount assumed, including the 5% additional dwellings surcharge where the recipient already owns another property. The consideration is capped at the market value of the property, a cap that only matters in negative equity.

The 2026/27 residential rates you apply to the assumed balance are these.

Portion of the assumed balance	Standard rate	Rate if the recipient already owns a dwelling
Up to £125,000	0%	5%
£125,001 to £250,000	2%	7%
£250,001 to £925,000	5%	10%
£925,001 to £1,500,000	10%	15%
Above £1,500,000	12%	17%

Worked example: stamp duty on a mortgaged property gift

David owns a buy-to-let flat worth £340,000 with an outstanding mortgage of £90,000. He gives the flat to his adult son Jake, and Jake agrees to take over the mortgage as part of the gift.

• Chargeable consideration is the assumed mortgage balance, £90,000.
• Market value cap check: the property is worth £340,000, so the £90,000 sits well below it and the market value cap does not apply.
• Jake does not own another property, so no 5% additional dwellings surcharge.
• SDLT on £90,000: 0% up to £125,000. SDLT is nil.

The £90,000 falls entirely inside the nil-rate band, so nothing is due. Change one number and the answer changes sharply. Had the mortgage been £200,000, the sum is 0% on the first £125,000, which is nil, then 2% on the remaining £75,000, which is £1,500. Total SDLT £1,500. And if Jake already owned another property, so the surcharge applied, it would be 5% on the first £125,000, which is £6,250, plus 7% on £75,000, which is £5,250, giving £11,500 on a gift Jake paid nothing for.

That last figure is the one to hold on to. A modest mortgage creates a modest bill, but the surcharge can multiply it several times over where the person receiving the gift is already a homeowner. Work out the SDLT before you commit to a mortgaged gift, not after. Your lender also has to agree to the transfer of the loan, which is a separate hurdle and not a formality.

Do you pay stamp duty on inherited property?

No. A property that passes to you under a will or under the intestacy rules is not a purchase, there is no chargeable consideration, and no SDLT is due. You have no stamp duty return to file. Inheritance tax may well be payable on the estate, but that is settled by the executors before the property reaches you; it is not a charge on you as a buyer. Our page on SDLT on probate property transfers covers the estate-side mechanics, and inheriting a house in the UK covers what to do next.

Two consequences of inheriting show up later, when you buy something else.

• The three-year window on the surcharge. If you inherit a share of 50% or less in a dwelling, that share is ignored for three years from the date you inherited it when HMRC tests whether your next purchase attracts the 5% additional dwellings surcharge. This sits at FA 2003 Sch 4ZA para 16. Once the three years are up, or if your share rises above half, it counts against you and your next purchase carries the surcharge. If you are planning to buy, the timing of that window is worth checking.
• Your first-time buyer status is gone. Inheriting a property means you have held an interest in a dwelling, so you cannot claim first-time buyer relief on a later purchase. There is no three-year let-off on that one.

Stamp duty only enters the picture on an inheritance where money moves. If you and your sibling inherit a house jointly and you pay them cash for their half, you have bought that half and SDLT is charged on what you paid. The same principle applies to any arrangement where a beneficiary takes more than their share and pays the difference.

What other taxes do you pay when you gift a property?

Stamp duty is usually the small one. The table below shows where you stand across the four taxes for the gift structures people actually use. The rest of this page unpacks each cell.

What you are doing	Capital gains tax	Inheritance tax	Stamp duty
Gifting to your spouse or civil partner while living together	None now; they take over your original cost, so the gain is deferred not cancelled	Exempt between spouses	Nil if nothing passes back to you
Gifting to an adult child or sibling, no mortgage	18% or 24% on the gain up to market value	7-year clock starts	Nil
Gifting to an adult child who takes over the mortgage	18% or 24% on the gain up to market value	7-year clock starts	Charged on the mortgage balance they take over
Gifting into a discretionary trust	18% or 24%, or hold-over where the gift is a chargeable lifetime transfer	20% entry charge on anything above your nil-rate band	Charged if a mortgage is taken over
Inheriting a property	None for you; your base cost is the probate value	Paid by the estate before you receive it	Nil

Capital gains tax on gifted property: do you pay CGT on a gift?

Yes. Capital gains tax on gifting property falls on you, the person giving it away, and not on the person receiving it. This is the charge that catches people out, because it is counterintuitive: you receive nothing, yet you are treated as having sold the property at its full market value on the day of the gift. That is the connected-person market-value rule at TCGA 1992 s.17. Your children, your siblings and your parents are all connected persons, so a gift to any of them is treated as a sale at market value whatever you actually received.

How much CGT on gifted property you end up paying comes down to two numbers: what the property cost you, and what it is worth on the day you give it away. You have to fund the tax from your own savings. In 2026/27 the residential property rates are 18% on gains falling in your basic-rate band and 24% above it, and the annual exempt amount is £3,000, applied before the rate. You must also file the 60-day CGT on UK property return and pay within 60 days of completion of the gift.

Worked example: CGT on a buy-to-let flat gifted to an adult child

Take David again. He paid £180,000 for the flat, it is now worth £340,000, and this time there is no mortgage on it. He has no main residence relief available because he never lived there. He gives it to his adult son Jake.

Item	Amount
Deemed proceeds, being market value on the day of the gift	£340,000
Less: what the flat originally cost	(£180,000)
Less: incidental costs of acquisition (estimate)	(£2,500)
Gross gain	£157,500
Less: annual exempt amount (2026/27)	(£3,000)
Taxable gain	£154,500
CGT at 24% (higher-rate taxpayer, residential property)	£37,080

David pays £37,080 in tax on a gift for which he received nothing, and he pays it out of his own money. Jake owes no CGT at all, and his base cost for any future sale is £340,000, the market value on the day he received it.

You cannot defer this with hold-over relief on a normal buy-to-let. TCGA 1992 s.165 hold-over applies to gifts of business assets, and a flat let on an assured shorthold tenancy is an investment asset, not a business one. The only hold-over route open on residential investment property is the s.260 route, which needs the gift to be a chargeable lifetime transfer for inheritance tax, in practice a gift into a discretionary trust rather than a direct gift to your child.

For the full CGT mechanics, including main residence relief interaction, part gift and part sale, and the trust hold-over route, see our CGT on gifting property to family members page. If you are weighing up whether to gift to your children at all, our decision tree for gifting property to adult children takes you through it step by step.

Inheritance tax on gifted property: the 7-year clock

A gift of property to another individual is a potentially exempt transfer under IHTA 1984 s.3A. Nothing is payable at the time. If you survive seven full years from the date of the gift, it falls out of your estate completely and no inheritance tax is ever charged on it. The clock starts on the day the gift takes legal effect.

If you die within those seven years, the gift becomes chargeable. The figure brought into the calculation is what the property was worth on the day you gave it away, not what it is worth when you die, which works in your favour where values have risen. That figure is set against your available nil-rate band of £325,000, frozen until 5 April 2031, and anything above it is charged at 40%. Taper relief under IHTA 1984 s.7(4) then reduces the tax charge, but only where you survived at least three years.

Taper relief: what it reduces and what it does not

Years you survive after the gift	Reduction in the tax charge
Under 3 years	None
3 to 4 years	20%
4 to 5 years	40%
5 to 6 years	60%
6 to 7 years	80%
7 years or more	Fully exempt

Read that table carefully, because it is the single most misunderstood thing in lifetime gifting. Taper cuts the tax on the slice above your nil-rate band. It does not cut the value of the gift, and it does not cut the amount of nil-rate band the gift uses up. If the whole gift sits inside your nil-rate band there is no tax to taper and surviving five years instead of four saves you nothing.

Worked example: the 7-year clock and taper relief

David gifts the flat, worth £340,000, on 1 March 2027. He has made no earlier chargeable lifetime transfers, so his full nil-rate band of £325,000 is available. He dies on 1 September 2032, five years and six months later, which puts him in the 5 to 6 year taper band.

Item	Amount
Value of the gift on the day it was made	£340,000
Less: available nil-rate band (assumed unused)	(£325,000)
Chargeable excess	£15,000
Tax on the excess at 40%	£6,000
Taper relief at 60% (5 to 6 years): reduction in the tax charge	(£3,600)
Inheritance tax payable on the gift	£2,400

The whole £340,000 still used up David's nil-rate band, which means £340,000 less of his remaining estate is sheltered. Taper only reduced the £6,000 charge on the £15,000 excess. Had he lived to 1 March 2034, seven full years, the gift would have been exempt and nothing at all would have been due on it.

There is a further cost if the property you are giving away is your own home. The residence nil-rate band of £175,000 per person, also frozen until 5 April 2031, is only available where a residence passes to your direct descendants on your death. Give your home away in your lifetime and it is no longer in your estate to pass on, so the residence band has nothing to attach to and you lose it: up to £175,000 of relief for you, £350,000 for a couple. That band is also tapered away by £1 for every £2 by which your net estate exceeds £2m.

For a deeper look at when to pull the trigger on a mid-life buy-to-let gift, weighing the CGT you pay today against the inheritance tax you save if you survive, see our page on the IHT 7-year clock and mid-life property gifting strategy.

Can you give your house away and carry on living in it?

Not without paying a full market rent for it, and this is the trap that destroys more lifetime gifting plans than anything else. Under FA 1986 s.102, if you give a property away but keep a benefit in it, most obviously by staying in the house rent-free after signing it over to your children, the gift is a gift with reservation of benefit. Where that applies:

• The property does not leave your estate. It is fully chargeable to inheritance tax on your death as though you had never made the gift.
• No 7-year clock starts. You can survive twenty years and it will make no difference.
• You have handed away legal ownership and got nothing for it in tax terms.

The classic case is a parent transferring the family home to their children and staying put. On the title, the gift is real and the children own the house. For inheritance tax it is a nullity for as long as you go on living there for free. HMRC sets its position out at IHTM14300 and following.

You have two ways out. You can pay a full market rent to the new owner for your continued occupation: the rent has to be genuinely commercial, reviewed periodically and actually paid, and the recipient declares it as rental income and pays income tax on it. Or you can move out entirely, at which point a fresh 7-year clock starts from the date your occupation ended, under the rules on gifts where the reservation ceases in s.102(4).

Watch one more charge in this area. Pre-Owned Assets Tax, at FA 2004 Sch 15, can impose an annual income tax charge on the value of the benefit you enjoy where you have disposed of a property and still get the use of it, even in cases where the reservation of benefit rules do not technically catch you. It is a specialist area and you should take advice before contemplating any retained use of a property you have given away.

Can you gift a property to avoid care home fees?

No, and trying is riskier than most people realise. Local authorities in England assess your assets when working out what you must contribute to means-tested care. A property gift made in order to reduce those assets can be treated as a deliberate deprivation of assets under the Care Act 2014 and the Care and Support (Charging and Assessment of Resources) Regulations 2014. Where the council concludes a gift was motivated by avoiding care fees, it can assess you as though you still owned the property, leaving you liable for a contribution you no longer have the asset to fund.

There is no fixed look-back period here, which is where this differs sharply from the inheritance tax 7-year rule. A local authority can look back as far as it considers appropriate. The test turns on what you intended at the time of the gift, so a gift made for family or estate planning reasons at a point when care needs were not a foreseeable prospect carries much lower risk than one made after a diagnosis. This is a separate regime from HMRC's, and it needs separate specialist advice if care is a realistic prospect for you.

Who pays the tax on the rent after you gift a rental property?

If you gift to an adult child, they do. The rental income becomes theirs and is taxed on them at their own rates, which is how income-splitting through a gift actually works, and it can save real money where your child is a basic-rate taxpayer and you are not.

If you gift to a child under 18, you do. Under ITTOIA 2005 s.620 and s.624, where a parent makes an outright gift of income-producing property to their own minor, unmarried child, the income from that property is attributed straight back to the parent and taxed as the parent's. These settlement provisions are broad: you do not need a formal trust for them to apply, and a plain deed of gift to a minor child is enough to engage them.

There is one narrow let-off. Under ITTOIA 2005 s.629(3), the attribution does not apply in a tax year where the total income arising to the child under the settlement is £100 or less. That covers a token fractional interest and very little else; any real share of a rental property will produce far more than £100 a year.

The attribution stops when your child turns 18. From that point the rent is theirs and is taxed on them. So if income-splitting is your aim, a gift to an adult child achieves it and a gift to a minor does not, at least until they come of age. Our page on gifting property to minor children covers the bare trust route and its traps.

Gifting property to your spouse: no CGT now, but the gain is only deferred

A transfer of property between spouses or civil partners who are living together in the same tax year is a no-gain no-loss disposal under TCGA 1992 s.58. You pay no CGT when you make it. Your spouse takes over your original acquisition cost rather than the market value on the day, so the gain does not disappear: it is parked, and it crystallises when your spouse eventually sells, measured from the cost you paid years ago.

The transfer is also exempt from inheritance tax between you under IHTA 1984 s.18. That exemption does not shrink your combined estate, though. The asset simply moves from one of you to the other and stays inside the family estate for inheritance tax purposes.

Two limits are worth knowing. The no-gain no-loss rule does not apply if you are separated and living apart and the transfer falls in a tax year after the year you separated; in that case the market-value rule applies and CGT can arise. And transfers made as part of a divorce settlement have their own treatment, which our page on SDLT relief on divorce and separation transfers covers.

What records should you keep after a property gift?

Keep all of the following, made at the time rather than reconstructed later:

• The executed deed of gift, certified copy.
• The Land Registry TR1 form and the updated title register showing the new owner as registered proprietor.
• An independent RICS valuation of the property at the date of the gift. This supports your market-value CGT figure and the value of the gift for inheritance tax. A missing, undated or amateur valuation is one of the most common reasons HMRC challenges the tax position on a gift years afterwards.
• Evidence of any mortgage the recipient took over, meaning written confirmation from the lender of the balance outstanding on the day of the gift, which supports your SDLT figure under Sch 4 para 8.
• Correspondence or written evidence that the gift was unconditional and that you kept no benefit in the property, which supports the reservation of benefit analysis.

Inheritance tax enquiries commonly arise many years after the gift, on your death, when you are not there to explain what happened. Records made at the time, particularly the valuation and the deed, are what your executors will rely on. HMRC and the courts treat valuations produced after the fact with scepticism.

Gifting property compared with a family investment company

A direct gift crystallises your CGT at market value straight away and starts a 7-year clock, assuming you keep no benefit. Transferring the same property into a family investment company is also a disposal at market value for CGT under the s.17 rule, so you do not escape the immediate charge that way either. What the company gives you is flexibility afterwards.

In a family investment company the property is held by the company. You typically hold preference or growth shares while your adult children hold ordinary shares that capture future appreciation. Later gifts of shares to family members can attract minority discounts for inheritance tax, which can reduce the value brought into charge. Income retained inside the company is taxed at corporation tax rates, 25% on profits above £250,000 in 2026/27. The company does not avoid CGT on the way in; it restructures the inheritance tax position and gives you income flexibility a direct gift cannot.

Our family investment company mechanics page covers the structure in detail. As a rule of thumb, the direct gift is simpler and cheaper to execute, and the company is worth the set-up and ongoing compliance cost only where the portfolio is substantial and your planning horizon is long.