Last updated: 14 October 2026
Can a house swap be treated as tax evasion?
Not if it’s a genuine exchange that you report properly. Swapping properties with someone is legal. But for tax purposes it’s treated as two sales at market value, so capital gains tax (CGT) and stamp duty land tax (SDLT) can apply to both sides. It becomes evasion if the swap is used to hide a gain, the values are understated, or it’s not reported. Disguising a sale as a swap to avoid tax is also likely to be challenged.
How HMRC treats a house swap
| Tax | Treatment |
| Capital gains tax | Each person disposes of their property at market value |
| SDLT | Each buyer pays SDLT on the market value of the property they acquire |
| Inheritance tax | If values differ and the swap is between family, the difference may be a gift |
| Income tax | Not usually, unless you’re a property trader |
When no CGT is due
- Main home: if each property is your only or main residence, private residence relief normally covers the gain
- Spouses or civil partners: transfers are on a no gain, no loss basis
- Losses: if the property has fallen in value
When CGT is due
If one or both properties are rental or second homes, the gain is calculated using the market value of the property you receive as the sale price. CGT on UK residential property is 18% or 24%, and you must report and pay within 60 days of completion.
Example
Ben owns a buy-to-let worth £300,000, which he bought for £200,000. He swaps it with his sister’s flat, also worth £300,000. Ben has a £100,000 gain, minus his £3,000 annual exemption, so he pays CGT of up to £23,280. His sister also pays tax on any gain on her flat. Both pay SDLT on the market value of what they receive, possibly including the 5% surcharge on additional dwellings.
Red flags for HMRC
- Using a low value to reduce CGT or SDLT
- Not reporting the swap within 60 days
- A swap with a connected person at undervalue
- Using a series of swaps to create artificial losses
HMRC can use market value in place of any figure agreed by connected people, such as family members.
Evasion vs avoidance
Tax evasion is deliberately hiding or misreporting, and is a criminal offence. Tax avoidance is using the rules in ways Parliament didn’t intend, and may be challenged by HMRC under the General Anti-Abuse Rule. A properly reported swap is neither.
What to do before swapping
- Get independent valuations of both properties
2. Take legal and tax advice
3. Report any CGT within 60 days
4. File SDLT returns within 14 days of completion
Records to keep
Keep the valuations, the contracts for both properties, the completion statements and the SDLT returns. If HMRC asks about the swap later, these show that market values were used and that everything was reported on time.
Frequently asked questions
Is a house swap the same as a part-exchange?
For tax, both are treated as sales.
Do I need a solicitor?
Yes, both properties must be transferred properly.
Can we swap homes with no money changing hands?
Yes, but tax is based on market values.
Is SDLT due on both sides?
Yes, each buyer is liable.
Related: CGT on your main residence, stamp duty rates and the CGT reporting deadline.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with property tax advice. See our small business accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
