Do You Pay Stamp Duty on Inherited Property?

Inheriting a property is one of the genuinely simpler events in UK tax — at least as far as stamp duty is concerned. SDLT is a tax on the purchase of land. An inheritance, by definition, is not a purchase. Nobody is paying anybody for the property; it passes from the deceased's estate to the beneficiary by operation of the will (or the intestacy rules where there is no will). As a general rule, no SDLT is payable when you inherit.

That said, several common follow-on situations do trigger SDLT — and inheriting property can have important indirect consequences for any subsequent property purchase you make. This article walks through each one.

The basic rule

Under SDLT, the tax is charged on the "chargeable consideration" given for a land transaction. In an inheritance, no consideration changes hands — the executor transfers the property to you under the will. The result: no SDLT return is required, no SDLT is payable, and the only tax issue at the estate level is inheritance tax (a separate regime with its own thresholds).

Exception 1: assuming a mortgage as part of the inheritance

If the deceased's property has a mortgage on it, and you (the beneficiary) take on responsibility for that mortgage as a condition of receiving the property, HMRC treats the assumed debt as chargeable consideration. The SDLT calculation is performed on the outstanding mortgage balance, not on the market value of the property.

Example: a parent dies leaving a £400,000 house with a £180,000 mortgage to their daughter. The daughter takes on the mortgage and the property. SDLT is calculated as if she had bought the house for £180,000.

Exception 2: buying out co-beneficiaries

If a property is left jointly to multiple beneficiaries — three siblings receiving a one-third share each, for example — and one of them buys out the others, the buy-out payment is chargeable consideration for SDLT.

Example: three siblings inherit a £450,000 house in equal shares. One sister wants to keep the property; she pays each of the other two £150,000 for their share. From an SDLT perspective, she has bought a two-thirds share for £300,000 in chargeable consideration. SDLT is calculated on the £300,000.

If the buyer-out already owns a home, the 5% additional-dwelling surcharge applies on top of the standard rates (unless the inherited property is replacing her main residence). The surcharge can be substantial — on a £300,000 buy-out, that's an extra £15,000.

Exception 3: estate sells, beneficiary buys

If the executor sells the property on the open market and the beneficiary is the buyer, that is an ordinary purchase. Standard SDLT applies, plus any surcharges relevant to the buyer's circumstances. The fact that the buyer was named in the will is irrelevant in this case — what mattered was that the property was sold rather than transferred.

The indirect effect: inherited property and the second-home surcharge

Even when no SDLT is payable on the inheritance itself, the inheritance changes your position for any future property purchase. If you already own your home and then inherit a second property, you now own two residential properties. If you then buy a third home (or even a replacement main residence in some circumstances), the 5% additional-dwelling surcharge may apply on that purchase.

There is a partial relief: a 36-month grace period in which an inherited property may not count towards your "property count" for surcharge purposes — but the rules are nuanced (the relief depends on whether you inherited a majority share, when you inherited, and what other property you own). Read more in our second home surcharge guide.

Inheritance tax vs stamp duty

These are entirely different taxes. SDLT applies on purchase. Inheritance Tax (IHT) applies on the deceased's estate above the nil-rate band (currently £325,000, with a residence nil-rate band on top in some cases). IHT is paid by the estate, not by the beneficiary. The two regimes do not interact — paying one does not affect the other.