SDLT Reliefs & Exemptions: The Complete 2026 Reference

Introduction

SDLT reliefs and exemptions can reduce or eliminate the stamp duty liability on a transaction — but only if they are correctly identified, properly claimed, and not subsequently withdrawn. For conveyancing solicitors, knowing which reliefs exist is only half the battle. You also need to understand the qualifying conditions, the mechanics of claiming on the SDLT return, and the anti-avoidance rules that can claw relief back years after the transaction completed.

This guide catalogues every significant SDLT relief currently available, explains the claiming process, and highlights the mistakes that most frequently lead to HMRC enquiries and penalties.

Quick check: Use our SDLT Calculator to see which reliefs apply to your client's transaction and calculate the tax with relief automatically applied.

Key Takeaways

1. Relief must be actively claimed on the SDLT return — it is not applied automatically, even when the transaction clearly qualifies
2. Group relief and charities relief are the most valuable reliefs by quantum, but both carry clawback provisions
3. Anti-avoidance rules can withdraw relief if certain events occur within three years of the transaction
4. Filing errors are the most common problem — using the wrong relief code or failing to claim at all
5. Partial relief reduces the SDLT liability rather than eliminating it; the return must still show the correct residual amount

Full Catalogue of SDLT Reliefs

Group Relief (Schedule 7, FA 2003)

What it does: Provides full relief (0% SDLT) on transfers of property between companies that are members of the same group.

Qualifying conditions:

• The transferor and transferee must be members of the same group — meaning one is a 75% subsidiary of the other, or both are 75% subsidiaries of a common parent
• The 75% threshold is measured by ordinary share capital — the parent must hold at least 75% of the ordinary share capital of the subsidiary, and be beneficially entitled to at least 75% of profits available for distribution and at least 75% of assets on a winding up
• The transferee must exist as a body corporate at the effective date

Practical notes:

• Group relief is widely used in corporate restructurings, intra-group asset transfers, and property portfolio reorganisations
• The relief applies to both freehold transfers and the grant or assignment of leases
• No SDLT is payable, but an SDLT return must still be filed claiming the relief

Warning: Group relief is subject to a three-year clawback (see Anti-Avoidance below). If the transferee leaves the group within three years, the relief is withdrawn and the full SDLT becomes payable with interest.

Charities Relief (Schedule 8, FA 2003)

What it does: Provides full relief on property acquisitions by charities, provided the property is to be held for charitable purposes.

Qualifying conditions:

• The purchaser must be a charity within the meaning of the Charities Act (or equivalent)
• The property must be acquired for qualifying charitable purposes — this includes use in furtherance of the charity's objects, as an investment where the income is applied to charitable purposes, or as functional property of the charity
• The transaction must not be part of an arrangement where the purpose is tax avoidance rather than genuine charitable acquisition

Practical notes:

• Charities relief is an all-or-nothing relief — there is no partial version
• If a charity acquires property partly for charitable purposes and partly for non-charitable purposes, the relief does not apply (and HMRC may challenge claims where the charitable use is incidental)
• Housing associations that are registered charities can claim this relief on property acquisitions

Warning: If the charity ceases to use the property for qualifying charitable purposes within three years, the relief is clawed back. A charity that buys a building, claims relief, and then sells it to a commercial buyer within three years will lose the relief retrospectively.

Right-to-Buy Relief

What it does: Provides a reduction in SDLT for tenants exercising their statutory right to buy under the Housing Act 1985.

How it works:

• The consideration for SDLT purposes is the discounted price that the tenant pays — not the market value of the property
• Since right-to-buy discounts can be substantial (up to £96,000 in London, £87,200 outside London for 2025/26, subject to annual adjustment), the SDLT is calculated on a much lower figure than the property's market value
• First-time buyer relief may also apply if the purchaser qualifies, further reducing or eliminating the SDLT

Practical notes:

• This is not a standalone "relief" in the usual sense — rather, the SDLT rules simply tax the actual consideration paid, and the statutory discount is not treated as consideration
• No special relief code is required on the return; you simply enter the actual purchase price

Compulsory Purchase Relief (Section 60, FA 2003)

What it does: Provides relief where a property acquisition is facilitated by a compulsory purchase order (CPO).

How it works:

• Relief is available where the acquisition is made in the exercise of, or under the authority of, compulsory purchase powers
• The relief extends to purchases made by agreement where the purchaser has compulsory powers and could have acquired compulsorily
• The effect is a reduction in the chargeable consideration — specifically, the SDLT is calculated without the element of consideration that represents compensation for compulsory acquisition (as distinct from the market value of the land)

Practical notes:

• This relief is primarily relevant to local authorities, statutory undertakers, and development corporations
• In practice, most compulsory purchases by public bodies will also qualify for other exemptions (e.g., Crown exemption, or the consideration falling within the nil-rate band)
• Conveyancers acting for public-sector clients should check whether compulsory purchase relief, or a broader exemption, applies

Employers Relocation Relief (Section 67, FA 2003)

What it does: Provides relief where an employer (or a relocation company acting on the employer's behalf) acquires an employee's former residence as part of a job relocation scheme.

Qualifying conditions:

• The employer must operate a qualifying relocation scheme — meaning the employee is required to change their place of residence as a result of starting a new job, a transfer, or a change in duties
• The property must be the employee's former main residence
• The acquisition must be made at no more than market value (to prevent the relief being used to pass value to the employee tax-free)
• The property must not have been acquired more than two years after the employee started working at the new location

Practical notes:

• Relocation relief is relatively niche but can produce significant savings for large employers that routinely relocate staff
• The relief must be claimed on the SDLT return using the appropriate code
• If the employer uses a relocation agent, the agent can claim the relief on the employer's behalf

Alternative Finance Relief (Sections 71A–73, FA 2003)

What it does: Ensures that property transactions structured to comply with Islamic (Sharia-compliant) finance principles are not double-charged with SDLT.

Background:

Sharia-compliant finance structures typically involve the financial institution purchasing the property and then selling it to the customer on deferred terms (murabaha), leasing it to the customer (ijara), or entering a diminishing co-ownership arrangement (musharaka). Without relief, these structures would attract SDLT twice — once when the institution acquires the property and again when the customer acquires it.

How it works:

• The first transaction (acquisition by the financial institution) is exempt from SDLT
• The second transaction (acquisition by the customer from the institution) is charged to SDLT as if the customer had purchased the property directly
• For diminishing musharaka arrangements, SDLT is charged on the customer's initial share, and subsequent acquisitions of additional shares are exempt

Practical notes:

• The financial institution must be an authorised financial institution (regulated by the FCA or PRA)
• The relief applies to both residential and commercial property
• Ensure the return correctly reflects the alternative finance structure — incorrect filing can lead to the customer being assessed on the wrong amount

Relief for Property Transfers in Connection with Divorce or Dissolution

What it does: Exempts property transfers between spouses or civil partners that are made in connection with the dissolution of a marriage or civil partnership.

Qualifying conditions:

• The transfer must be made pursuant to a court order or in connection with a written agreement between the parties in contemplation of, or during the course of, divorce or dissolution proceedings
• The parties must be spouses or civil partners (or former spouses/partners where the transfer is pursuant to a court order made in the proceedings)

Practical notes:

• This is one of the most commonly encountered exemptions in residential conveyancing
• No SDLT return needs to be filed for exempt transactions — but if in doubt about whether the exemption applies, it is safer to file a return claiming the exemption than to not file at all
• Transfers between cohabiting partners who are not married or in a civil partnership do not qualify for this exemption

Relief for Transfers Involving No Chargeable Consideration

What it does: Where a property is transferred for no consideration (a gift), no SDLT is payable provided no chargeable consideration passes.

Key caveat: If the property is subject to a mortgage and the transferee assumes responsibility for the mortgage debt, the outstanding mortgage balance is treated as chargeable consideration. SDLT is then due on that amount.

Practical example:

A parent transfers a property worth £500,000 to their adult child as a gift. The property has an outstanding mortgage of £200,000 which the child assumes.

• Chargeable consideration: £200,000 (the assumed mortgage debt)
• SDLT is calculated on £200,000 at the applicable rates
• The additional property surcharge may also apply if the child already owns another property

Warning: This is a common trap. Clients often assume that a gift of property is entirely free of SDLT. If there is any outstanding mortgage, the transfer is not SDLT-free.

Zero-Carbon Homes Relief (Expired)

Status: This relief was available for a limited period and has expired. It provided relief on purchases of new zero-carbon homes. No new claims can be made.

We mention it here because it occasionally appears in older guidance and clients sometimes ask about it. Advise them that the relief is no longer available.

Partial vs Full Relief

Some reliefs provide full exemption (SDLT reduced to zero), while others provide partial relief (SDLT reduced but not eliminated).

For partial reliefs, the SDLT return must still show the full consideration and calculate the reduced SDLT. The relief code tells HMRC how the reduced amount was derived.

Claiming Relief on the SDLT Return

The Mechanics

Relief is claimed by entering the appropriate relief code on the SDLT return (SDLT1 or SDLT1 supplementary). The return must be filed within the normal 14-day deadline regardless of whether relief reduces the liability to zero.

Key Filing Points

1. Always file a return — even if the relief reduces SDLT to zero. The only exception is for transactions that are wholly exempt (such as transfers for no chargeable consideration with no mortgage assumption, or certain Crown transactions). When in doubt, file.

2. Use the correct relief code — HMRC assigns specific codes to each relief. Using the wrong code can trigger an enquiry or delay processing. Common codes include:

   • Group relief
   • Charities relief
   • Alternative finance relief
   • Employers relocation relief

3. Include supporting information where required — some reliefs require additional details on the return, such as the group structure for group relief or the charity registration number for charities relief.

4. Retain evidence — keep documentation supporting the relief claim in the conveyancing file. If HMRC opens an enquiry (which they can do up to 9 months after filing, or longer in cases of careless or deliberate inaccuracy), you will need to produce evidence promptly.

Tip: When using SDLT filing software such as StampSorted, the system will prompt you to select the applicable relief and will apply the correct code automatically. This reduces the risk of code errors significantly.

Anti-Avoidance: Withdrawal of Relief and Clawback Periods

Several SDLT reliefs are subject to anti-avoidance clawback provisions. These provisions withdraw the relief — and require the SDLT to be paid retrospectively — if certain disqualifying events occur within a specified period after the transaction.

Group Relief Clawback (Three Years)

Group relief is withdrawn if, within three years of the effective date:

• The transferee ceases to be a member of the same group as the transferor (for example, because the subsidiary is sold to a third party)
• The transferee holds the property at the time it leaves the group (or holds a chargeable interest derived from the property)

There are exceptions — notably, if the transferee leaves the group as a result of a transaction that is itself exempt from SDLT (such as a share sale where the property was not the main asset), the clawback may not apply.

Practical impact: If your client is involved in a corporate restructuring and group relief was claimed on a property transfer, you must flag the clawback risk if there is any prospect of the group structure changing within three years.

Charities Relief Clawback (Three Years)

Charities relief is withdrawn if, within three years of the effective date:

• The charity ceases to hold the property for qualifying charitable purposes
• A disqualifying event occurs, such as the charity selling the property at market value to a non-charity

The charity must file an additional SDLT return and pay the SDLT that would have been due without the relief, plus interest.

Other Clawback Provisions

• Employers relocation relief can be withdrawn if the property is not disposed of by the employer within a reasonable period
• Alternative finance relief clawback can apply if the arrangement ceases to meet the qualifying conditions

General Anti-Abuse Rule (GAAR)

In addition to specific clawback provisions, HMRC can invoke the General Anti-Abuse Rule (Finance Act 2013) to counteract SDLT arrangements that are abusive. This is a backstop provision that applies to any relief claimed as part of a tax avoidance scheme that HMRC considers abusive.

Common Mistakes Solicitors Make with Relief Claims

1. Failing to Claim Relief at All

The most expensive mistake. A qualifying transaction is filed without claiming the applicable relief, and the client pays SDLT they need not have paid. While an amended return can be filed within 12 months, this relies on someone spotting the error.

Prevention: Build a relief-check into your post-completion workflow. Before filing, review the transaction against a checklist of potentially applicable reliefs.

2. Claiming the Wrong Relief Code

Using an incorrect code does not necessarily invalidate the claim, but it can trigger an HMRC enquiry and cause delays. In some cases, HMRC may reject the return and require re-filing.

Prevention: Use filing software that validates relief codes, or maintain an up-to-date reference of HMRC codes.

3. Ignoring Clawback Risk

Claiming group relief on a transaction and then failing to advise the client about the three-year clawback is a professional negligence risk. If the group structure changes and the SDLT becomes payable, the client may look to the conveyancer who filed the return.

Prevention: Always advise in writing when claiming a relief that is subject to clawback. Include the clawback period, the triggering events, and the financial exposure.

4. Claiming Charities Relief Without Verifying Charitable Purpose

Not every purchase by a charity qualifies for charities relief. The property must be held for qualifying charitable purposes. A charity that buys a property as a short-term speculative investment may not qualify.

Prevention: Obtain written confirmation from the charity's trustees or officers that the property will be used for qualifying charitable purposes, and retain this in the file.

5. Overlooking Mortgage Debt on Gift Transfers

As noted above, assuming a mortgage on a gifted property creates chargeable consideration. Failing to account for this results in an incorrect return.

Prevention: Always ask whether the property is subject to a mortgage, even when the transaction is described as a gift.

6. Applying Expired Reliefs

Reliefs change over time. Applying a relief that has been abolished (such as zero-carbon homes relief or, since June 2024, multiple dwellings relief) results in an incorrect return and potential penalties.

Prevention: Verify that the relief is current before claiming it. Check HMRC's published list of available reliefs or use software that is regularly updated.

7. Failing to File When Relief Reduces SDLT to Zero

Some solicitors assume that if no SDLT is payable, no return is required. This is incorrect for most reliefs — a return must still be filed. Failure to file is a separate offence that can attract its own penalty, even if no tax was due.

Prevention: File a return for every notifiable transaction, regardless of the SDLT outcome.

Less Common Reliefs and Exemptions

For completeness, the following reliefs and exemptions also exist but are encountered less frequently in general conveyancing practice:

Summary

SDLT reliefs exist to prevent over-taxation in specific circumstances, but they are not self-executing. Every applicable relief must be identified, claimed correctly on the return, and supported by evidence. The clawback provisions on group relief and charities relief add an ongoing monitoring obligation that extends well beyond the completion date.

For conveyancing solicitors, the practical message is straightforward: build a structured relief-check into your workflow, use the correct relief codes, advise clients in writing about clawback risks, and file a return even when the relief reduces SDLT to zero. These habits will protect your clients from overpaying and protect your firm from negligence claims and HMRC penalties alike.

Related Guides

• First-Time Buyer SDLT Relief — detailed guide to the most common residential relief
• Additional Property SDLT Surcharge — when replacement of main residence relief applies
• Commercial SDLT Rates — rates and reliefs for non-residential transactions

Need to identify which SDLT reliefs apply to your transaction? Try our free SDLT Calculator — it flags applicable reliefs and calculates the tax with and without relief.

Preparing for the May 2026 tax adviser registration deadline? Check your firm's readiness with our Compliance Checker.