Does an inherited share of a home trigger the SDLT surcharge

Q: What makes the inherited share start to count?

The three years run out. SDLTM09795 says a share inherited more than three years before the purchase counts as an interest in another dwelling, so it can trigger the higher rates if it is worth £40,000 or more. Your share goes above 50%. Under paragraph 16(3), if during the three years you become the only beneficial owner, or your share (with your spouse's) exceeds half, you are treated as owning the interest from that moment. Buying out a co heir is the usual way this happens; see SDLT when buying out a co owner's share. You inherit the whole property alone. Paragraph 16 only covers someone who becomes jointly entitled. A house left entirely to one child is not protected at all and counts from the day it is transferred. Two points work in the buyer's favour. Each interest is valued on its own, at market value and ignoring any mortgage (SDLTM09780 and SDLTM09785), so an inherited share worth under £40,000 never counts, however long it is held. And Condition C is tested at the end of the day of the purchase, so a share sold before or on the day of completion is not owned at that point.

Q: How does this work in practice?

Illustration only. Priya rents her home and is not married. Her mother's house is appropriated by the executors to Priya and her brother as tenants in common in equal shares on 1 March 2025. Priya's half is worth £200,000. On 1 November 2026 she buys a flat for £300,000 to live in. Her share is 50% and the purchase is within three years of 1 March 2025, so paragraph 16 ignores it. She pays standard rates: 0% on £125,000, 2% on the next £125,000 (£2,500) and 5% on £50,000 (£2,500), a total of £5,000. Had she been left 60% of the house, paragraph 16 would not apply and the higher rates would give £6,250 plus £8,750 plus £5,000, a total of £20,000. Had she waited until after the three years ended in early 2028 while still owning her half, the higher rates would apply unless she had disposed of the share by the end of the completion day.

Not straight away, if your share is 50% or less. Paragraph 16 of Schedule 4ZA to the Finance Act 2003 ignores a share of a dwelling you inherit jointly with someone else for three years from the date of the inheritance, so a home you buy in that window is not pushed into the 5% higher rates by it. The protection ends early if your share, counted together with any spouse or civil partner, goes above half.

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Why would an inherited share affect my next purchase?

An individual buying a dwelling for £40,000 or more pays the higher rates where, at the end of the day of the purchase, they own a major interest in another dwelling worth £40,000 or more that is not subject to a lease with more than 21 years left (Condition C in paragraph 3(4) of Schedule 4ZA), and the new home is not a replacement for their only or main residence (Condition D). Paragraph 2(5) says a major interest includes an undivided share, so a half share of a parent’s house counts in the same way as owning a whole property. GOV.UK confirms that property anywhere in the world is included.

The cost is significant. From 1 April 2025 the higher rates are 5% on the first £125,000, 7% on the next £125,000, 10% up to £925,000, 15% up to £1.5 million and 17% above that. The general rules are explained in SDLT higher rates for additional dwellings; this page deals only with the inheritance exception.

What exactly does paragraph 16 ignore?

The rule applies where, by virtue of an inheritance, a person becomes jointly entitled with one or more other people to a major interest in a dwelling, and their beneficial share does not exceed 50%. For three years beginning with the date of the inheritance, that person is not treated as owning the interest for Condition C, or for the equivalent test in paragraph 6(1)(e) where several dwellings are bought together.

“Inheritance” means acquiring the interest under, or towards satisfaction of an entitlement under, a will, or on an intestacy (paragraph 16(5)). HMRC’s guidance at SDLTM09795 lists three routes: the personal representatives transfer or appropriate the property to satisfy a specific gift of it, they appropriate it to satisfy a cash gift or a share of residue, or it passes automatically to heirs under the law of another country.

The 50% test depends on how the share is held:

Tenants in common: your share, added to any share held by your spouse or civil partner, must be half or less.
Joint tenants: HMRC says you and any spouse or civil partner who is also a joint tenant must make up exactly half, or a minority, of the joint tenants. Under paragraph 16(4)(c), a couple holding as joint tenants with only one other joint tenant are over 50%.

The difference between the two forms of ownership is covered in joint tenants vs tenants in common.

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When does the three years start?

Not necessarily on the date of death. SDLTM09795 says the date of the inheritance is the date you become entitled to the interest. Because an interest in an estate that has not yet been administered is not itself a major interest, this is usually the date the personal representatives transfer or appropriate the property to you. HMRC points to CG30700 onwards for cases where the residue has been ascertained and is held for the beneficiary absolutely. Where the property is abroad and passes directly to heirs, the date of death is the date of the inheritance.

In practice this means the window often starts some months after death, once the estate is dealt with. Keep the assent or appropriation document, because it is the evidence of when the clock started.

What makes the inherited share start to count?

The three years run out. SDLTM09795 says a share inherited more than three years before the purchase counts as an interest in another dwelling, so it can trigger the higher rates if it is worth £40,000 or more.
Your share goes above 50%. Under paragraph 16(3), if during the three years you become the only beneficial owner, or your share (with your spouse’s) exceeds half, you are treated as owning the interest from that moment. Buying out a co heir is the usual way this happens; see SDLT when buying out a co owner’s share.
You inherit the whole property alone. Paragraph 16 only covers someone who becomes jointly entitled. A house left entirely to one child is not protected at all and counts from the day it is transferred.

Two points work in the buyer’s favour. Each interest is valued on its own, at market value and ignoring any mortgage (SDLTM09780 and SDLTM09785), so an inherited share worth under £40,000 never counts, however long it is held. And Condition C is tested at the end of the day of the purchase, so a share sold before or on the day of completion is not owned at that point.

How does this work in practice?

Illustration only. Priya rents her home and is not married. Her mother’s house is appropriated by the executors to Priya and her brother as tenants in common in equal shares on 1 March 2025. Priya’s half is worth £200,000. On 1 November 2026 she buys a flat for £300,000 to live in.

Her share is 50% and the purchase is within three years of 1 March 2025, so paragraph 16 ignores it. She pays standard rates: 0% on £125,000, 2% on the next £125,000 (£2,500) and 5% on £50,000 (£2,500), a total of £5,000.
Had she been left 60% of the house, paragraph 16 would not apply and the higher rates would give £6,250 plus £8,750 plus £5,000, a total of £20,000.
Had she waited until after the three years ended in early 2028 while still owning her half, the higher rates would apply unless she had disposed of the share by the end of the completion day.

What does the exception not do?

It does not make you a first time buyer. SDLTM29845 says a purchaser who has previously acquired a major interest in a dwelling anywhere in the world, including by inheritance or gift, is not a first time buyer, and a part share is enough. Priya in the example pays standard rates but cannot claim first time buyer relief.

It also only affects Condition C. If your spouse or civil partner owns another property, paragraph 9 tests the purchase as if they were the buyer (SDLTM09820), and their property counts in the usual way unless their own inherited share is protected. Whether a new home replaces your main residence is a separate question, dealt with in reclaiming the SDLT surcharge after selling your old home.

Is there SDLT on the inheritance itself?

Normally not. GOV.UK says property left to you in a will is almost always exempt from SDLT, even if there is a mortgage on it, and no return is needed. A variation of the will within two years of the death is also exempt, provided the new beneficiary gives nothing in return, including taking over a mortgage. Capital Gains Tax on a later sale of the inherited share is explained in selling inherited property.

What mistakes do buyers make?

Counting three years from the date of death and assuming the protection has expired, when the appropriation came later.
Forgetting to add a spouse’s inherited share when testing the 50% limit.
Assuming a whole house inherited by one person is protected for three years.
Buying out a sibling’s share before buying a new home, which takes the share above half.
Claiming first time buyer relief despite an inherited share.
Overlooking an inherited share of a property abroad, which counts in the same way.

For the basic rates and filing rules see Stamp Duty Land Tax explained.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.