Do You Pay Stamp Duty on a Family Concessionary Purchase? Clear Guide

If you are buying a property from a relative at below market value, you may be wondering how Stamp Duty works. A concessionary purchase can reduce or remove the need for a deposit, but it does not automatically exempt the buyer from tax. Understanding Stamp Duty on a family concessionary purchase is essential because HMRC applies specific rules on discounted sales.

This guide explains whether Stamp Duty applies, how it is calculated, and what buyers should prepare for. It provides general information only and does not offer regulated tax or mortgage advice.

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Do You Pay Stamp Duty on a Family Concessionary Purchase?

Yes — Stamp Duty is usually payable.

Stamp Duty Land Tax (SDLT) applies to most residential property purchases in England and Northern Ireland, including concessionary purchases between family members.

But the key question is: what value is Stamp Duty calculated on?

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How Stamp Duty Is Calculated on a Family Concessionary Purchase

Stamp Duty is based on the purchase price, not the property’s market value.

Example

• Market value: £300,000
• Sale price: £200,000

Stamp Duty is calculated on £200,000, not £300,000.

This gives concessionary purchasers a tax advantage compared with buying on the open market.

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Why HMRC Uses the Purchase Price

HMRC treats family concessionary purchases like any other arm’s-length transaction unless:

• The buyer assumes debt on behalf of the seller
• The property transfer involves other financial arrangements
• The sale price does not genuinely reflect consideration

Most concessionary sales involve a simple discounted price, making SDLT straightforward.

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When Stamp Duty May Still Be £0

You may pay no Stamp Duty if:

• The discounted purchase price is below the SDLT threshold
• You are a first-time buyer and qualify for relief
• The transaction falls within the nil-rate band

Example

If the sale price is £175,000 and the nil-rate band applies, no Stamp Duty would be due.

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First-Time Buyer Relief and Concessionary Purchases

First-time buyers may benefit from reduced or zero Stamp Duty if:

• The sale price is within the qualifying threshold
• The buyer has never owned property before
• The property will be their main residence

The fact that the purchase is from a family member does not disqualify first-time buyer eligibility.

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What Counts as Consideration in a Concessionary Purchase?

HMRC defines “consideration” as anything of value given for the property.

In a family concessionary purchase, consideration may include:

• The cash sale price
• Any debts taken over by the buyer
• Any outstanding mortgage transferred to the buyer

If the buyer assumes part of the seller’s mortgage, that amount may be included in the SDLT calculation.

Example

• Sale price: £1
• Mortgage assumed: £150,000

Stamp Duty is calculated on £150,001.

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Common Misunderstanding: “Stamp Duty Is Based on Market Value”

This is incorrect for most family concessionary purchases.
HMRC uses market value only in limited situations, such as:

• Transfers between connected companies
• Certain transfers within business relationships
• Transfers linked to shares or partnership arrangements

Family-to-family discounted sales are typically exempt from market-value rules.

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How Solicitors Handle Stamp Duty in Concessionary Purchases

Solicitors ensure:

• Correct SDLT calculation
• Completion of HMRC forms
• Submission of payment within deadlines
• Evidence of receipt for the buyer and lender

Even if no Stamp Duty is due, a return may still need to be filed.

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Do You Pay Additional Stamp Duty for Second Homes?

Yes. If the buyer already owns another property, the 3% additional property surcharge may apply, even on concessionary purchases.

Example

• Sale price: £200,000
• Standard SDLT (example band): £1,500
• Additional property surcharge (3% of £200,000): £6,000

Total SDLT = £7,500

The discount does not remove this surcharge.

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Does the Seller Pay Stamp Duty?

No. Stamp Duty is paid by the buyer only.
The seller may face Capital Gains Tax (CGT) implications, but this is separate from SDLT.

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Practical Examples

Example 1: No SDLT Due

• Sale price: £180,000
• Buyer is a first-time buyer
• Within nil-rate band

Stamp Duty = £0

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Example 2: SDLT Due on Discounted Price

• Sale price: £240,000
• Buyer is not a first-time buyer

Stamp Duty is calculated on £240,000 (not £300,000).

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Example 3: Additional Property Surcharge Applies

• Buyer owns another home
• Sale price: £200,000

SDLT = Standard tax + 3% surcharge.

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Example 4: Mortgage Assumption Increases SDLT

• Sale price: £1
• Buyer takes over £150,000 of seller’s mortgage

Stamp Duty = On £150,001.

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Why SDLT Matters for Family Concessionary Purchases

Understanding Stamp Duty on a family concessionary purchase helps buyers plan their total costs. Although the discount may eliminate deposit requirements, buyers still need funds for:

• SDLT
• Solicitor fees
• Valuation fees
• Survey costs
• Mortgage fees (if applicable)

Setting aside funds early helps avoid delays at completion.

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Summary

Stamp Duty still applies on a family concessionary purchase, but it is usually calculated on the sale price, not the market value. Exceptions exist where the buyer takes over debt or already owns property. First-time buyers may qualify for relief, and additional SDLT may apply for second homes. Understanding these rules helps buyers prepare for the financial commitments beyond the discounted purchase price.

This article provides general information only. For personalised tax guidance, speak with a qualified professional.