Under a contract dated 1 October A agrees to sell a plot of land
to B.
The total value of the transaction is £400,000. A
deposit of £5,000 is paid by B to A. As
no charge to stamp duty land tax arises.
On 1 November B agrees to a sub-sell one quarter of the land
to C for £150,000.
On 1 December, at B's direction, C will take a conveyance
from A, paying £50,000 to B and £100,000 to B.
Under the legislation
The two transfers are treated as separate contracts, one from A
to B and one from A to C.
C would therefore pay tax at the rate of 1% on £150,000
and B would pay at 3% on £300,000.
Had the original contract between A & B been
substantially performed then
B contracts to purchase a plot of land from A for £400,000.
B then agrees to sub-sell half of the land to C for
£250,000 and retain the other half.
B does not substantially perform the contract with A prior to
entering into the secondary contract with C.
C will pay £200,000 to A and £50,000 to B and the
property will pass from A to C at the direction of B.
C will be liable to stamp duty land tax at 1% of the
£250,000 consideration for the A to C contract.
B will pay £200,000 to A and will be liable to tax on
one half of the value of the original contract i.e. £200,000.
Tax would be due at the rate of 1%.
A developer B contracts to purchase a plot of land from A for
£400,000.
B intends to develop the site and sub-sell in four
residential plots to C, D, E & F for £150,000 each.
If the developer enters the site to develop the property or
pays the bulk of the consideration then this would substantially
perform the contract between A & B and tax would be due at 3%
of the £400,000.
C, D, E & F would pay stamp duty land tax at 1% of
£150,000 each.
