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Higher SDLT on Non-Residential Property & Additional Residential Properties - Linked Transactions

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When 2 or more property transactions involve the same buyer and seller or the transactions are between people connected with either of them, they count as ‘linked’ for Stamp Duty Land Tax ('SDLT') purposes. In such cases the buyer pays any SDLT due on the total value of all linked transactions. This is still the case even though the approach to taxing linked transactions has changed for non-residential transactions and for additional residential properties completing after 31/03/2016 (if the transitional rules do not apply).

For any linked transactions which are calculated under the new rules, 4 steps will need to be performed. Firstly we have to add together the amounts paid for all of the linked transactions. This is called the “relevant consideration” (step 1). Then we have to apply the new rates to the relevant consideration to calculate the amount of tax that would be due on that consideration (step 2). Then we have to work out the fraction given by dividing the amount paid for the particular transaction by the relevant consideration (step 3) . Lastly we have to multiply the amount given by Step 2 by the fraction calculated at Step 3. This gives the amount of tax due for that particular transaction.

The linked transaction rule needs to be applied alongside with the SDLT rates. However when the transactions occurred over a period of time including pre- and post-stamp duty changes then we have to take into account the relevant SDLT rates for each transaction. Here is an example of when the new rates apply for one transaction and the old rates of SDLT apply for a different transaction within the linked transactions:


  • Transaction 1: P purchases a warehouse from V on 1 March 2016 for £4,000,000.The old rules apply.
  • Transaction 2: P purchases an adjoining warehouse from V on 1 June (having exchanged contracts the previous month) for £3,000,000. The new rules apply.

The surrounding circumstances are such that the transactions are linked.

The relevant consideration is £7,000,000 (£4,000,000 plus £3,000,000).

The tax due on Transaction 1 is worked out using the old rules. The rate of tax is the rate that would have been payable on the relevant consideration. That is 4%, giving tax due of £160,000 (4% of £4,000,000).

The tax due on Transaction 2 is worked out in the way described above.


Step 1: The relevant consideration is £7,000,000.

Step 2: The tax due under the new rules on £7,000,000 is £339,500.

Step 3: The fraction is 3,000,000/7,000,000 or 3/7.

Step 4: Three sevenths of £339,500 is £145,500.)

Therefore the linked transaction rule has not gone but the correct SDLT rates will need to be applied carefully. To demonstrate that the rule is still effective we just have to go through the steps outlined to calculate the linked transaction SDLT /as per the HMRC guidance/ for the purchase of 1 property at £5,000,000 and another property at £2,000,000. The stamp duty will be higher for the linked transaction than if we just calculate the stamp duty for a simple transaction at £7,000,000.

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