For Stamp Duty Land Tax a bare trust is looked through, so the beneficiary is the buyer. Trustees of any other trust are the buyers themselves, but for the 5% higher rates a beneficiary with a life interest or a right to the income is treated as the buyer, while a purchase by discretionary trustees is taxed as if made by a company, so the higher rates apply to almost every residential purchase.

Who is the buyer when trustees buy property?

Schedule 16 to the Finance Act 2003 splits trusts into two kinds. HMRC’s manual at SDLTM31700 describes them as bare trusts, which include nominee arrangements, and settlements, which means every other kind of trust, including interest in possession, discretionary, accumulation and mixed trusts and trusts governed by foreign law (SDLTM31720).

  • Bare trusts. Under Schedule 16 paragraph 3(1), where a person acquires an interest as bare trustee, SDLT applies as if the interest were vested in, and the trustee’s acts were the acts of, the beneficiary.
  • Settlements. Under paragraph 4, trustees of a settlement are treated as the purchasers of the whole interest acquired, including the beneficial interest.

This basic rule decides who signs the return and who is liable. A separate set of rules in Schedule 4ZA then decides whose circumstances count for the higher rates, and the answer is not always the same person.

How are bare trusts and nominees treated?

A bare trust is one where each beneficiary is absolutely entitled as against the trustees (SDLTM31710). HMRC’s example at SDLTM31710A is a company holding a let house as nominee for an individual: the acquisition is treated as made by the beneficiary, who is liable for the tax and responsible for the return. All the normal rules then apply to the beneficiary, including the higher rates, the non resident surcharge and first time buyers’ relief.

There is one exception. Paragraph 3(2) and (3) provide that on the grant of a lease to a bare trustee, the trustee is treated as purchaser of the whole interest. For the higher rates, however, Schedule 4ZA paragraph 10(2) brings the beneficiary back in: where the subject matter is a lease of a dwelling and the purchaser is a bare trustee, the beneficiary is treated as the purchaser.

Where the beneficiary is under 18, paragraph 12 of Schedule 4ZA treats the child’s parents, and in some cases a parent’s spouse or civil partner, as the purchaser and owner instead. This stops parents avoiding the surcharge by buying a second home in a child’s name. The rule does not apply where the trustee is acting under a deputyship made by the Court of Protection or its equivalent.

How are life interest and income trusts treated?

The trustees are the purchasers for SDLT generally, so they file the return. But Schedule 4ZA paragraph 10(1) and (3) provide that if, under the terms of the settlement, a beneficiary will be entitled to occupy the dwelling for life or to the income earned from it, the beneficiary rather than the trustee is treated as the purchaser for the higher rates.

So the test is applied to the beneficiary. If the beneficiary will own no other dwelling at the end of the day, or the purchase replaces their only or main residence, the standard rates apply. If they already own a home they are keeping, the higher rates apply. Paragraph 11 also treats such a beneficiary as owning dwellings already held in the trust, so trust property counts when the same person later buys a home personally.

The non resident surcharge follows the same logic. GOV.UK states that for a bare trust, or a trust under which a beneficiary is entitled to occupy for life or to the income, residence is tested on the beneficiaries, though this does not change who must file and pay.

How are discretionary trusts treated?

Where no beneficiary has a right to occupy for life or to the income, the trustees are the purchasers for every purpose. Schedule 4ZA paragraph 13 says that even if the trustees are individuals, the purchase is tested as if they were not. GOV.UK puts it simply: the purchase is treated as if it were made by a company.

The consequence is that paragraph 4 of Schedule 4ZA applies. The higher rates are charged on any purchase of a dwelling for £40,000 or more, unless it is subject to a lease with more than 21 years to run. It does not matter that the trust owns no other property, and the replacement of main residence exception, which is only available to individuals, cannot help.

Two points soften this. First, the 17% rate in Schedule 4A for companies buying homes over £500,000 does not apply: paragraph 3(4) of Schedule 4A excludes a company acting in its capacity as trustee of a settlement. Second, for the non resident surcharge, the trust is non resident if any trustee is non resident under the SDLT tests, so a UK resident trustee body avoids the 2%.

Is there SDLT when property goes into or out of a trust?

Settling a property on trust, or appointing it out to a beneficiary, is usually a gift. Schedule 3 paragraph 1 exempts any transaction with no chargeable consideration, so no tax is due. Two things change that:

  • Debt. If the trustees or the beneficiary take on a mortgage secured on the property, the debt assumed is consideration under Schedule 4 paragraph 8. The rules are explained in SDLT on gifts of property with a mortgage.
  • Payment for an appointment. Schedule 16 paragraph 7 treats any consideration given for a person becoming an object of a power of appointment or discretion as consideration for the property they later receive.

Will trusts produce a specific trap. SDLTM04045 explains that where nil rate band discretionary trustees accept the surviving spouse’s promise to pay, or a charge they can enforce personally, in satisfaction of a legacy, and the house is transferred to the spouse, that promise or charge is chargeable consideration up to the property’s market value. A charge over the property that cannot be enforced personally, with no change in anyone’s liability, gives no charge. See nil rate band discretionary will trusts for the wider planning.

A change of trustees is not a transaction at all. HMRC treats the trustees of a continuing settlement as a single continuing body, so no return is needed when a trustee retires or is appointed, even if the property is mortgaged (SDLTM31745).

Who files the return and pays?

For a settlement, the responsible trustees are those in office at the effective date and anyone who becomes a trustee later. The return can be made by any one or more of them, but all the trustees making it must sign the declaration (SDLTM31720 and SDLTM31730). A trustee who joins later is not liable for penalties for earlier failures. The return and payment are due within 14 days of completion, as for any buyer.

How does this work in practice?

Illustration only. Trustees buy a £300,000 house in 2026 to 2027 for a beneficiary to live in.

Trust and beneficiary Who is tested SDLT
Life interest trust; beneficiary owns nothing else Beneficiary, standard rates £5,000
Life interest trust; beneficiary keeps their own home Beneficiary, higher rates £20,000
Discretionary trust Trustees as if a company, higher rates £20,000

The standard figure is 2% on £125,000 plus 5% on £50,000. The higher figure is 5% on £125,000, 7% on £125,000 and 10% on £50,000.

What mistakes do trustees make?

  • Testing the wrong person. For a life interest trust it is the beneficiary’s other property that counts, not the trustees’.
  • Assuming a discretionary trust with no other property pays standard rates. It pays the higher rates on any dwelling of £40,000 or more.
  • Overlooking a child’s interest. Property held on bare trust for a minor counts as the parents’ when they buy.
  • Missing debt in a will trust. Satisfying a nil rate band legacy with an IOU can make the spouse’s inheritance of the home chargeable.

For the tax treatment of the trusts themselves, see types of trust and how they are taxed and bare trusts. The surcharge conditions are set out in SDLT higher rates for additional dwellings.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.