Do You Pay Stamp Duty When You Remortgage?

The Short Answer

You do not pay stamp duty when you remortgage. Moving your mortgage to a new lender, switching to a new deal with your current lender, or borrowing extra against your home for home improvements all leave your stamp duty position unchanged. Stamp Duty Land Tax is a tax on acquiring land or property, and taking out a new loan secured on a home you already own is not an acquisition.

The exception is a remortgage that happens alongside a change of ownership. If someone is added to the deeds, or one owner buys the other out, that change is a land transaction in its own right, and the share of the mortgage the new owner takes on can count as the price paid. That is a transfer of equity, and it is taxed on its own rules.

Why a Remortgage Is Not Taxed

SDLT is charged on the acquisition of a chargeable interest in land. Section 48(2)(a) of the Finance Act 2003 lists a security interest as an exempt interest, and s48(3)(a) defines it as an interest or right held to secure the payment of money. A mortgage is exactly that. When a lender takes a charge over your home, it acquires an exempt interest, so there is nothing for SDLT to tax, and you, the owner, acquire nothing at all.

The same reasoning covers every common remortgage:

• switching lender when a fixed rate ends
• a product transfer with your existing lender
• borrowing more to fund an extension or clear other debts
• moving from a joint mortgage to a sole mortgage where the ownership is already sole

None of these needs an SDLT return. Your conveyancer will still charge for the legal work, which our stamp duty and solicitors fees calculator can help you budget for.

When Remortgaging Does Involve Stamp Duty

Stamp duty can arise when the remortgage is part of a change in who owns the home. Under Schedule 4 paragraph 8 of the Finance Act 2003, taking on existing debt counts as consideration. Paragraph 8(1A) treats a change in a party's rights or liabilities under a mortgage on the property as an assumption of that debt, and paragraph 8(1B) splits the debt by each owner's share of the property. GOV.UK's own guidance gives the example of a partner who takes on half of the mortgage and so gives chargeable consideration equal to that half, even though no money changes hands.

Where tax is due, it is worked out on that consideration at the normal residential rates, and the 5% higher rates can apply if the person acquiring the share already owns another home. A divorce or civil partnership dissolution transfer is exempt, but unmarried partners do not get that exemption. Our divorce property transfer guide covers the conditions.

Worked Examples

Both examples use the England and Northern Ireland residential rates and assume the person acquiring the share owns no other home, so the higher rates do not apply.

1. Adding a partner when you remortgage

You own a £400,000 home on your own with a £300,000 mortgage. You remortgage into joint names and transfer a half share to your unmarried partner, who becomes jointly liable for the loan. No cash is paid. Your partner takes on half of the £300,000 debt, so the chargeable consideration is £150,000. SDLT is 0% on the first £125,000 and 2% on the next £25,000: £500.

2. Buying out a co-owner with a remortgage

You and a former partner own a £400,000 home 50/50 with a £200,000 mortgage. You remortgage to take sole ownership, pay them £100,000 for their equity, and take over their £100,000 share of the existing mortgage. The chargeable consideration is £100,000 cash plus £100,000 of debt, £200,000. SDLT is 0% on the first £125,000 and 2% on the next £75,000: £1,500. The new mortgage being larger than the old one makes no difference to that figure.

To run your own figures, including the higher rates, use the transfer of equity stamp duty calculator.

Remortgaging to Buy Another Property

Releasing equity from your home to fund a deposit on a buy-to-let or second home is still a tax-free remortgage. The stamp duty falls on the new purchase, and because you will then own two homes, that purchase normally pays the 5% higher rates on top of the standard bands. The second home stamp duty calculator shows the bill for the new property.

Scotland and Wales

This page covers Stamp Duty Land Tax in England and Northern Ireland. Scotland charges Land and Buildings Transaction Tax and Wales charges Land Transaction Tax, each under its own legislation and collected by Revenue Scotland and the Welsh Revenue Authority. If you are adding or removing an owner in Scotland or Wales, check the rules with your conveyancer.

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