Settlor interested Trust and SDLT

I am working with a settlor-interested Trust that contains a single property worth £300,000. The Trust has served its purpose and all parties wish to simplify matters. The proposal is to end the Trust and return the property to the settlor who will then gift 75% of the property to relatives for their use with the remaining 25% being either transferred to his wife or retained personally.

At the same time, the settlor in his personal capacity is looking at moving home. Ideally, an ordinary sale of his main residence (also worth £300,000 by coincidence) and purchase of a replacement main residence (say £325,000) would take place but due to the vagaries of the current market, the purchase of the replacement property may take place before the sale of his current home.

The question is how would SDLT fit in to the above proposal and would there be any advantages to ensuring the Trust matter was fully resolved before his house move or being left until afterwards. CGT is not an issue, only SDLT. Many thanks


The additional SDLT rate is due on the purchase of the new residence, but (broadly) can be reclaimed if the old residence is disposed of within three years of the purchase of the new residence. (I don’t think the timing of the transfer of the Trust property affects the SDLT position.)

Kind regards

Ihsan Ali
I Will Solicitors Ltd

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