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No Stamp Duty Land Tax (SDLT) is payable simply because you inherit a property. But an inherited property usually counts as one you already own, so if you then buy another while still holding it, the higher rates for additional dwellings — 5% on top of the standard rates — can apply. Two things soften that: an inherited share of 50% or less is ignored for three years, and the higher rates never apply to a purchase that replaces your main home.
Stamp duty and inherited property is one of the most frequently misunderstood areas of estate administration. You pay no stamp duty on the inheritance itself, but the inherited property can change the stamp duty on your next purchase — and the rules about when it does, and when it does not, are more specific than most people expect.
Stamp Duty Land Tax is a tax on property transactions — specifically, on the purchase or acquisition of property for consideration. Inheriting a property is not a purchase; it is a transfer by operation of law following a death. No SDLT is payable by the beneficiary at the point of inheriting.
This applies whether you inherit under a will, under the intestacy rules, or as the surviving joint tenant of a jointly owned property. No SDLT return needs to be filed with HMRC in connection with the inheritance itself.
Since April 2016, a buyer who already has a major interest in a residential property anywhere in the world — worth £40,000 or more — pays the higher rates for additional dwellings on any further residential property they buy. For transactions completing on or after 31 October 2024 the higher rates are 5 percentage points above each standard band; for transactions before that date they were 3 points.
An inherited property is, in general, a property you own for this purpose. So if you inherit a house and then buy a flat, or already own your home and inherit a second property and then move, the higher rates can apply to the purchase — subject to the two rules below.
For example, if you rent, inherit the whole of a flat, and a year later buy a house for £400,000 as your first home while still owning the flat:
First-time buyer relief is not available either, because owning the inherited flat means you are no longer a first-time buyer.
The rules contain a specific disregard for inherited interests (Finance Act 2003, Schedule 4ZA, paragraph 16; HMRC manual SDLTM09795). An inherited interest in a dwelling is ignored when deciding whether the higher rates apply to a purchase, provided that:
The common case this covers is a parent's home left to two or more children. If you inherit a third of your late mother's house in 2025 and buy your first home in 2027, the inherited third is disregarded and the higher rates do not apply on account of it. If instead you inherit the whole house, or your share rises above 50% (for instance by buying out a sibling), or you wait more than three years, the inherited property counts and the higher rates apply to the purchase.
Note:
The disregard is about whether the higher rates apply to a purchase you make. It does not change what you owe on the inherited property itself — which is nothing — and it does not stop the inherited property counting once the three years are up.
The higher rates do not apply where the property you are buying replaces your only or main residence. That is the case if you sold (or gave away) your previous main home in the three years before the purchase, or if you sell it within three years afterwards. In the second case you pay the higher rates on completion and then claim a refund of the extra from HMRC, within 12 months of the sale of the old home or of the filing date of the SDLT return, whichever is later.
The test is about your previous main home. An inherited property you have never lived in is not your previous main home, so selling it does not make a purchase a replacement and does not earn a refund. What matters is what you do with the home you were living in:
A common question arises where one beneficiary wants to buy out the others and keep the property — for example, a child buying out siblings to keep the family home.
Where a beneficiary pays the other beneficiaries for their shares, that is a purchase for SDLT purposes. SDLT is calculated on the consideration paid for the shares acquired, not the full market value of the property. Whether the higher rates apply to that purchase depends on the same tests as any other: what else the buyer owns, and whether it replaces their main residence. Note that buying out siblings takes the buyer's own share above 50%, which ends the inherited-interest disregard for any later purchase.
If the property is simply assented to the beneficiary — transferred as their inheritance without any payment — no SDLT is payable.
Where the transaction is more involved, a solicitor should confirm the SDLT position before it completes.
The rules above apply to England and Northern Ireland, where SDLT applies. Scotland and Wales have their own land transaction taxes, with broadly similar structures but different rates and detail:
Scotland — Land and Buildings Transaction Tax (LBTT): administered by Revenue Scotland. The Additional Dwelling Supplement (ADS) is 8% of the full purchase price for contracts entered into on or after 5 December 2024 (it was 6% before). Inherited property counts as owned for ADS purposes, and the replacement-of-main-residence rules have their own detail — check Revenue Scotland's guidance.
Wales — Land Transaction Tax (LTT): administered by the Welsh Revenue Authority. The higher residential rates are banded rather than a single surcharge, starting at 5% on the first £180,000 and rising by band, for transactions on or after 11 December 2024 (each band rose by one percentage point on that date). Inherited property counts as owned for higher-rates purposes, and replacement-of-main-residence relief is available in similar circumstances — check GOV.WALES.
Practical points:
- Note the date you inherited and the size of your share. If the share is 50% or less, a purchase within three years of that date is not caught on account of the inheritance
- If you pay the higher rates because you are moving home and have not yet sold the old one, the three-year sale window and the 12-month refund claim both run from fixed dates — write them down
- Keep the SDLT return and completion statement for any purchase where the higher rates were paid; a refund claim needs both
- If you are buying out co-beneficiaries, have the solicitor confirm the SDLT on the consideration before exchange
Sources
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