Transfers on Divorce & Separation

Key facts

Transfers between spouses or civil partners under a court order are exempt from SDLT.
The exemption also applies to transfers under a formal separation agreement.
The exemption covers both married couples and civil partners.
If a mortgage is assumed by the receiving spouse, SDLT may be payable on the mortgage amount in certain circumstances.
No SDLT return is required for exempt transfers between spouses.

Overview

When a marriage or civil partnership ends, property is often transferred between the parties as part of the financial settlement. The SDLT legislation provides a specific exemption for these transfers, ensuring that the breakdown of a relationship does not trigger an additional tax charge on property redistribution.^[1]

This exemption is one of the most straightforward SDLT reliefs — when it applies, no SDLT is payable and no SDLT return needs to be filed.

Qualifying Transfers

The exemption applies to transfers of a major interest in land (freehold or leasehold) between parties to a marriage or civil partnership where the transfer is made:^[2]

Under a court order on divorce or dissolution of a civil partnership
Under a court order on judicial separation or a separation order
Under a court order at any time after the grant of a decree, order, or nullity
In connection with a formal agreement between the parties during separation or in contemplation of divorce

The court order is usually a consent order or financial remedy order made by the family court.

What the Exemption Covers

The exemption covers the full transfer, including any consideration involved:^[2]

Type of Consideration	Exempt?	Notes
Transfer for no payment	Yes	Most common scenario in divorce
Transfer with mortgage assumption	Yes	Taking on the other party’s mortgage share
Transfer in exchange for other assets	Yes	E.g. property in exchange for pension rights
Transfer with a cash payment (equalisation)	Yes	Lump sum paid under the court order

Important: The exemption applies only to transfers between the parties to the marriage or civil partnership. If the property is transferred to a third party (e.g. a family trust or a new partner), the exemption does not apply and normal SDLT rules apply.

Civil Partners

The exemption applies equally to civil partners. Transfers between civil partners on dissolution of a civil partnership (or under a separation order) benefit from exactly the same SDLT exemption as transfers between married couples on divorce.^[3]

Unmarried Couples

The exemption does not apply to unmarried couples (including cohabiting partners) who separate. If an unmarried couple separates and one partner buys out the other’s share of a jointly owned property, SDLT is payable on the consideration in the normal way.

In these cases:

The consideration includes any cash payment and any share of mortgage assumed
Normal SDLT rates and thresholds apply
An SDLT return must be filed within 14 days of the effective date

SDLT Return Requirements

A transfer that is exempt under the divorce and separation provisions is not a notifiable transaction. This means:^[2]

No SDLT return needs to be filed
No land transaction certificate is issued by HMRC
The Land Registry will accept the transfer for registration without a certificate, provided it is accompanied by evidence of the court order

Tip: Keep a copy of the court order or consent order with your property records. The Land Registry (and any future purchaser’s solicitor) may require evidence that the transfer was exempt from SDLT.

Impact on Higher-Rate Surcharge

Receiving a property through a divorce transfer has implications for the higher rates for additional dwellings. If you acquire a property through divorce and later purchase another property:

The transferred property counts towards your property ownership for higher-rate purposes
If you sell the transferred property before completing on a new purchase, the surcharge should not apply (assuming the new property is your main residence)
If you retain the transferred property and buy another, the 5% surcharge may apply to the new purchase

Frequently Asked Questions

Is SDLT payable when my ex-spouse transfers property to me in a divorce?

Generally no. If the transfer is made under a court order (such as a consent order or financial remedy order), it is exempt from SDLT. This applies regardless of the property’s value.

What about the mortgage — does taking on debt trigger SDLT?

A transfer between spouses or civil partners under a court order is exempt from SDLT even if the receiving spouse assumes the existing mortgage. The exemption covers the full consideration, including debt assumption. However, if you are purchasing the property from your ex-spouse outside of a court order, normal SDLT rules apply to any consideration paid.

Does this exemption apply to unmarried couples?

No. The SDLT exemption for divorce and separation only applies to married couples and civil partners. If an unmarried couple separates and one partner buys out the other’s share, normal SDLT rules apply to the consideration paid.

Does the transfer affect the higher-rate surcharge on future purchases?

It can do. After the transfer, if you own the property as your main residence, it should not trigger the higher-rate surcharge on a future purchase (provided you sell it before completing a new purchase). However, if you retain the transferred property as a second home while buying another, the surcharge may apply.

Sources

SDLT: transfers involving divorce or dissolution — GOV.UK
SDLTM09720 – Exemptions: transactions in connection with divorce — HMRC
Finance Act 2003, Section 71A — legislation.gov.uk