There are some situations when two or more property transactions that involve the same buyer and seller are treated as being 'linked' for Stamp Duty Land Tax (SDLT) purposes. People connected to a buyer or seller can count as being the same buyer or seller.
If two or more transactions are treated as linked then the buyer must pay any SDLT due on the total value of all the linked transactions. This may mean that they have to pay a higher rate of SDLT than if the transactions had been treated individually.
This guide will help you to understand when two or more transactions are linked. It explains the different ways that transactions might be linked and how this affects the SDLT position.
On this page:
HM Revenue & Customs (HMRC) will consider transactions to be linked if all of the following apply:
Two or more transactions can be linked if they involve the same buyer and seller or someone who's connected to them.
The definition of a connected person is quite broad. For example, it could be a relative like a brother or sister, a parent or a grandparent. Or it could be a husband, wife or civil partner - or perhaps one of their relatives. If the buyer or seller is a business, a connected person would include business partners and their relatives. It also includes companies and groups of companies who are connected to the business.
Read the related sections below for examples of when transactions are linked as part of the same arrangement or linked because they're part of a series of transactions. How and when an SDLT return must be made differs depending on the type of link it is.
It’s up to the buyer to decide which type of linked transaction applies.
Some transactions are linked because they're part of the same single arrangement or scheme. It makes no difference whether or not they're separately documented. So even if each transaction has a separate contract, if the purchases are part of the same deal then they're treated as being linked for the purpose of SDLT.
For example, if a residential property was sold in such a way that Mrs Smith purchased the house but her husband Mr Smith bought the garden, the two transactions would be linked. This is because Mr and Mrs Smith are connected people and they're buying things from the same seller as part of a single deal.
Because the two transactions are linked as part of a single arrangement, they're treated as one transaction for SDLT purposes. The chargeable consideration for the individual transactions are added together and SDLT is payable at the appropriate rate on the total if it exceeds the threshold.
Sometimes a purchase is followed by one or more related purchases. If there's something to link all the transactions together then they're treated as linked transactions for SDLT. There's no limit on the length of time between the transactions.
For example, a property speculator might agree to buy three new houses from a builder. The builder offers a special price for the houses because the speculator agrees in advance to buy three. It's agreed that the buyer will pay £180,000 for each house once it's complete.
In this example, the three transactions are linked as part of a series. So SDLT is payable on the total chargeable consideration of the three transactions - £540,000. The buyer pays SDLT at 4 per cent on £540,000, which is £21,600. If each individual transaction has a different effective date, a separate SDLT return will be needed for each.
If the transactions in the above example hadn't been linked, SDLT would have been payable at the lower rate of 1 per cent on the chargeable consideration of each individual transaction. So the total SDLT due on the three transactions would have been £5,400. This may have been the case if the speculator had bought each of the three houses from the same builder in three completely separate transactions with no prior agreement or option, no special price or discount, or anything else to link them.
When you complete transactions you'll usually need to notify HMRC by completing an SDLT return. With linked transactions you must notify each purchase or transfer within 30 days of the effective date (this is usually the completion date).
Some land and property transactions do not have to be notified to HMRC.
Find out which transactions don't need to be notified
When you fill in a return online you must indicate, where asked, that there are linked transactions. If you are completing a paper SDLT1 form place an X in box 13.
If the linked transactions are part of the same scheme or arrangement and they have the same effective date, you can choose to make a single return and one payment. When you do this the transactions are treated as a single transaction and all the purchasers are treated as joint purchasers and all have to sign the return. This would be the case in the example given above where Mr and Mrs Smith buy two parts of the same property between them.
If they have different effective dates (for example, if Mrs Smith in the example above bought the house on one date and Mr Smith bought the land on a different date) then two returns and separate payments of SDLT tax are needed.
If there is a series of linked transactions you'll need to notify HMRC and pay any SDLT due when you complete each purchase.
A separate return will be required for any further linked transactions. The earlier transaction should be revisited to see if any additional SDLT is due, because the total chargeable consideration given for all linked transactions has increased and a higher rate of SDLT applies.
Based on the earlier example, if the property speculator buys the first house of three at £180,000 they pay SDLT at 1 per cent on that transaction - £1,800.
Six months later they buy the second house, again for £180,000. The total chargeable consideration for SDLT purposes is now £360,000. The appropriate rate is 3 per cent, which is applied to each transaction separately. The buyer notifies HMRC by making a new return for the second transaction and paying tax at a rate of 3 per cent. They must also write to Stamp Taxes explaining there is a later linked transaction and list the UTRNs, paying the additional 2 per cent due on the first transaction.
Eight months later, they buy the third house for £180,000. The total value for SDLT purposes is now £540,000. SDLT is due on this sum at 4 per cent - that is, £21,600. Again, an SDLT return must be made to notify the third transaction and pay SDLT at 4 per cent. The buyer completes a further return by writing to Stamp Taxes to revisit the first two transactions and pay the additional 1 per cent SDLT on each.
Find out how to complete a Stamp Duty Land Tax return and payments
SDLT becomes due on transactions worth more than a certain amount. This amount is known as the threshold. There is more than one threshold for SDLT, with different rates payable for each.
Both the thresholds and the rates can vary from year to year. You can check both in our guide on Stamp Duty Land Tax rates and thresholds.
Stamp Duty Land Tax rates and thresholds
If you need any help with deciding how the SDLT rules apply in a particular situation you can contact the HMRC Stamp Taxes Helpline.
You might sometimes want to get advice in advance from HMRC on how to treat linked transactions for SDLT purposes. You can read more in the guide 'Obtaining advice on how SDLT will apply' by following the link below.
Contact the Stamp Taxes Helpline
