Inheriting a property does not trigger stamp duty (SDLT). The transfer on death is not a land transaction under Finance Act 2003 s.43.
But owning an inherited property can affect SDLT on your next purchase — and when you eventually sell, CGT applies on any gain since probate value.
This page covers: no SDLT on inheritance · the 5% surcharge if you already own property · the 3-year refund rule · CGT rates from 30 October 2024.
Owning an inherited property can make your next purchase more expensive. From 31 October 2024, HMRC charges an additional 5% surcharge on the purchase of any residential property if you already own one or more. An inherited property counts — even if you didn't buy it, even if you don't live in it.
The under-50% exception (SDLTM09807). If you inherit less than 50% of a property and that is your only interest in any residential property other than the one you are buying, HMRC treats you as not owning it for surcharge purposes. This is a narrow exception — if you own any other property outright, or own 50%+ of an inherited one, the surcharge applies.
You inherit only, don't own
You rent and have never owned property. You inherit a house. You later buy your own home — this is your only purchase and you have no other properties. No surcharge applies.
You own your home, then inherit
You already own the home you live in. A parent's house passes to you. You now own two properties. Any further purchase (buy-to-let, new home) will attract the 5% surcharge until you sell one.
You inherit a share under 50%
You and two siblings each inherit one-third of an estate property. Your 33% share falls below the 50% threshold (SDLTM09807). If this is your only other interest, the surcharge is disapplied on your next purchase.
If you paid the surcharge but later sell your previous main home, you can reclaim it. This matters when you inherit a property while you still own your main residence, then later sell the main home. The refund window is 3 years from the date of the surcharge purchase, or 12 months from the disposal — whichever is later.
Buy property
Pay 5% surcharge because you own inherited home
Sell previous main home
Within 3 years of the surcharge purchase
Claim refund from HMRC
Within 12 months of the sale
The refund is claimed via HMRC's online portal or by writing to the Stamp Taxes office. You'll need the UTRN from your original SDLT1 return. HMRC typically processes refunds within 15 working days.
You don't pay tax when you inherit — you pay Capital Gains Tax when you sell, on any gain since probate value. Your base cost is not what the deceased originally paid. It is the open-market value at the date of death as agreed with the HMRC Shares and Assets Valuation team — the same figure used to calculate Inheritance Tax. Any gain above that is subject to CGT when you sell.
Worked example. Probate value: £280,000. Sale price: £340,000. Gross gain: £60,000. Less annual exemption: £3,000. Taxable gain: £57,000. At 24% (higher-rate): £13,680 CGT due. Report and pay within 60 days of completion via HMRC's UK Property Account (CGT PPD).
60-day reporting rule. Residential property CGT must be reported and paid within 60 days of completion — not at the end of the tax year. Missing this deadline triggers automatic penalties starting at £100, plus interest on the unpaid tax.
Get the probate-value evidence and CGT cost basis organised before you sell
The ERA assembles title documents, the HMRC-agreed probate valuation, and all CGT workings into one estate file — exactly what your solicitor and the 60-day CGT return will require.
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