Overview
You do not pay Stamp Duty Land Tax if you buy a property in:
When 2 or more property transactions involve the same buyer and seller, they count as ‘linked’ for Stamp Duty Land Tax. HMRC may count people connected to a buyer or seller as being the same buyer or seller.
If 2 or more transactions are treated as linked then the buyer pays any Stamp Duty Land Tax due on the total value of all linked transactions. This may mean that they pay a higher rate of Stamp Duty Land Tax than if the transactions are counted individually.
If all the properties that link are residential, apply the residential property rates to the linked transactions.
Higher rates of Stamp Duty Land Tax may be charged from 1 April 2016 on purchases of additional residential properties.
If any or all of the properties that link are non-residential, apply the non-residential property rates to the linked transactions.
Stamp Duty Land Tax transactions that count as linked
HMRC counts transactions as linked if:
- there’s more than one transaction
- the transactions are between the same buyer and seller or between people connected with either of them
- the transactions are part of a single arrangement or scheme or part of a series of transactions
Connected persons
A connected person could be your relative, for example your brother, sister, parent, grandparent, husband, wife or civil partner, or one of their relatives.
If the buyer or seller is a business, a connected person would be a business partner and their relatives. It also includes companies and groups of companies who are connected to the business.
Different kinds of linked transactions
How and when you do a Stamp Duty Land Tax return depends on the type of linked transaction you have.
Transactions linked as part of a single arrangement
Some transactions are linked because they’re part of the same single arrangement or scheme. It’s the same whether you document them separately or not. If each transaction has a separate contract, and if the sales are part of the same deal, they count as linked for Stamp Duty Land Tax.
If you sell a residential property in such a way that one person buys the house but their relative buys the garden, the 2 transactions are linked. They’re connected people and they’re buying things from the same seller as part of a single deal.
Because the 2 transactions are linked, calculate the amount of tax due on the total chargeable consideration for all the transactions. Then, apportion this amount between the transactions in proportion to their share of the total chargeable consideration.
Transactions linked as part of a series of transactions
When a sale is followed by one or more related sales, if there’s something to link all the transactions together, they count as linked transactions for Stamp Duty Land Tax. There’s no limit to the length of time between the transactions.
Example
You’re a property speculator buying a new house from a builder. Later, you buy a second and finally a third house. The builder offers a special price for the second and third houses. You pay £280,000 for each house once the work is finished.
The 3 transactions link as part of a series. You must work out the amount of tax due on the total chargeable consideration for all the transactions to date, at the rates in force at the time of that transaction. Then, you must apportion this amount to each transaction in proportion to its share of the total chargeable consideration. You may need to pay more tax on the earlier transactions.
On the first transaction, tax is due at 0% on £250,000 and 5% on £30,000. The total would be £1,500.
On the second transaction, the tax due on the total consideration of £560,000 is:
- 0% on £250,000
- 5% on £310,000
The total would be £15,500.
At this stage, the tax due on each transaction is £7,750, so an additional £6,250 is due for the earlier transaction.
On the third transaction, the tax due on the total consideration of £840,000 is:
- 0% on £250,000
- 5% on £590,000
The total would be £29,500.
At this stage, the tax due on each transaction is £9,833, so an additional £2,083 is due for each of the first and second transactions.
Relief for transfers involving multiple dwellings applies in this case.
Higher rates of Stamp Duty Land Tax may be charged from 1 April 2016 on purchases of additional residential properties.
If the transactions in this example were not linked, the amount of Stamp Duty Land Tax payable on the second and third transactions would have been the same as on the first. So, the total Stamp Duty Land Tax due on the 3 transactions would have been £4,500.
This could be the case if the speculator had bought each of the 3 houses from the same builder in 3 completely separate transactions with:
- no prior agreement or option
- no special price or discount
- anything else to link them
Notify HMRC and pay Stamp Duty Land Tax
When you complete transactions you’ll usually need to tell HMRC by filling an Stamp Duty Land Tax return. With linked transactions you must notify each purchase or transfer within 14 days of the effective date, this is usually the completion date. Some land and property transactions do not have to be notified to HMRC.
When you fill in a return online you must show that there are linked transactions. If you’re filling a paper SDLT1 form put an X in box 13.
Return and payment for a single scheme or arrangement
If the linked transactions are part of the same scheme or arrangement and they’ve the same effective date, you can make a single return and one payment. If you do, the transactions count as a single transaction and all the buyers count as joint buyers and all must sign the return.
If they’ve different effective dates, for example, if one buyer bought the house on one date and the other bought the land on a different date, you’d fill in 2 returns and send separate payments of Stamp Duty Land Tax.
Returns and payments for a series of linked transactions
If there’s a series of linked transactions, notify HMRC and pay any Stamp Duty Land Tax due when you complete each purchase.
You’ll do a separate return for each later linked transaction and, on each occasion you’ll submit a further return for each earlier transaction if more tax is due on those transactions.
To do this, write to HMRC Stamp taxes, and quote the Unique Transaction Reference Number for each of the linked transactions. Set out the revised amount of tax due on the earlier transaction (that result from the later linked transaction) on your return.
Stamp Duty Land Tax rates
You pay Stamp Duty Land Tax on transactions worth more than the threshold. There is more than one threshold for Stamp Duty Land Tax, with different rates for each.
You can find out more about thresholds and rates for Stamp Duty Land Tax.
Scottish transactions
Where Stamp Duty Land Tax applies to a transaction it cannot be linked with any transaction where Land and Buildings Transaction Tax applies, even if it includes land in Scotland.
Welsh transactions
Where Stamp Duty Land Tax applies to a transaction it cannot be linked with any transaction where Land Transaction Tax applies, even if it includes land in Wales.
Help and advice on linked transactions
For more help contact the HMRC Stamp Taxes helpline.
Overview
You do not pay Stamp Duty Land Tax if you buy a property in:
When 2 or more property transactions involve the same buyer and seller, they count as ‘linked’ for Stamp Duty Land Tax. HMRC may count people connected to a buyer or seller as being the same buyer or seller.
If 2 or more transactions are treated as linked then the buyer pays any Stamp Duty Land Tax due on the total value of all linked transactions. This may mean that they pay a higher rate of Stamp Duty Land Tax than if the transactions are counted individually.
If all the properties that link are residential, apply the residential property rates to the linked transactions.
Higher rates of Stamp Duty Land Tax may be charged from 1 April 2016 on purchases of additional residential properties.
If any or all of the properties that link are non-residential, apply the non-residential property rates to the linked transactions.
Stamp Duty Land Tax transactions that count as linked
HMRC counts transactions as linked if:
- there’s more than one transaction
- the transactions are between the same buyer and seller or between people connected with either of them
- the transactions are part of a single arrangement or scheme or part of a series of transactions
Connected persons
A connected person could be your relative, for example your brother, sister, parent, grandparent, husband, wife or civil partner, or one of their relatives.
If the buyer or seller is a business, a connected person would be a business partner and their relatives. It also includes companies and groups of companies who are connected to the business.
Different kinds of linked transactions
How and when you do a Stamp Duty Land Tax return depends on the type of linked transaction you have.
Transactions linked as part of a single arrangement
Some transactions are linked because they’re part of the same single arrangement or scheme. It’s the same whether you document them separately or not. If each transaction has a separate contract, and if the sales are part of the same deal, they count as linked for Stamp Duty Land Tax.
If you sell a residential property in such a way that one person buys the house but their relative buys the garden, the 2 transactions are linked. They’re connected people and they’re buying things from the same seller as part of a single deal.
Because the 2 transactions are linked, calculate the amount of tax due on the total chargeable consideration for all the transactions. Then, apportion this amount between the transactions in proportion to their share of the total chargeable consideration.
Transactions linked as part of a series of transactions
When a sale is followed by one or more related sales, if there’s something to link all the transactions together, they count as linked transactions for Stamp Duty Land Tax. There’s no limit to the length of time between the transactions.
Example
You’re a property speculator buying a new house from a builder. Later, you buy a second and finally a third house. The builder offers a special price for the second and third houses. You pay £280,000 for each house once the work is finished.
The 3 transactions link as part of a series. You must work out the amount of tax due on the total chargeable consideration for all the transactions to date, at the rates in force at the time of that transaction. Then, you must apportion this amount to each transaction in proportion to its share of the total chargeable consideration. You may need to pay more tax on the earlier transactions.
On the first transaction, tax is due at 0% on £250,000 and 5% on £30,000. The total would be £1,500.
On the second transaction, the tax due on the total consideration of £560,000 is:
- 0% on £250,000
- 5% on £310,000
The total would be £15,500.
At this stage, the tax due on each transaction is £7,750, so an additional £6,250 is due for the earlier transaction.
On the third transaction, the tax due on the total consideration of £840,000 is:
- 0% on £250,000
- 5% on £590,000
The total would be £29,500.
At this stage, the tax due on each transaction is £9,833, so an additional £2,083 is due for each of the first and second transactions.
Relief for transfers involving multiple dwellings applies in this case.
Higher rates of Stamp Duty Land Tax may be charged from 1 April 2016 on purchases of additional residential properties.
If the transactions in this example were not linked, the amount of Stamp Duty Land Tax payable on the second and third transactions would have been the same as on the first. So, the total Stamp Duty Land Tax due on the 3 transactions would have been £4,500.
This could be the case if the speculator had bought each of the 3 houses from the same builder in 3 completely separate transactions with:
- no prior agreement or option
- no special price or discount
- anything else to link them
Notify HMRC and pay Stamp Duty Land Tax
When you complete transactions you’ll usually need to tell HMRC by filling an Stamp Duty Land Tax return. With linked transactions you must notify each purchase or transfer within 14 days of the effective date, this is usually the completion date. Some land and property transactions do not have to be notified to HMRC.
When you fill in a return online you must show that there are linked transactions. If you’re filling a paper SDLT1 form put an X in box 13.
Return and payment for a single scheme or arrangement
If the linked transactions are part of the same scheme or arrangement and they’ve the same effective date, you can make a single return and one payment. If you do, the transactions count as a single transaction and all the buyers count as joint buyers and all must sign the return.
If they’ve different effective dates, for example, if one buyer bought the house on one date and the other bought the land on a different date, you’d fill in 2 returns and send separate payments of Stamp Duty Land Tax.
Returns and payments for a series of linked transactions
If there’s a series of linked transactions, notify HMRC and pay any Stamp Duty Land Tax due when you complete each purchase.
You’ll do a separate return for each later linked transaction and, on each occasion you’ll submit a further return for each earlier transaction if more tax is due on those transactions.
To do this, write to HMRC Stamp taxes, and quote the Unique Transaction Reference Number for each of the linked transactions. Set out the revised amount of tax due on the earlier transaction (that result from the later linked transaction) on your return.
Stamp Duty Land Tax rates
You pay Stamp Duty Land Tax on transactions worth more than the threshold. There is more than one threshold for Stamp Duty Land Tax, with different rates for each.
You can find out more about thresholds and rates for Stamp Duty Land Tax.
Scottish transactions
Where Stamp Duty Land Tax applies to a transaction it cannot be linked with any transaction where Land and Buildings Transaction Tax applies, even if it includes land in Scotland.
Welsh transactions
Where Stamp Duty Land Tax applies to a transaction it cannot be linked with any transaction where Land Transaction Tax applies, even if it includes land in Wales.
Help and advice on linked transactions
For more help contact the HMRC Stamp Taxes helpline.
