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HMRC internal manual

Stamp Duty Land Tax Manual

From
HM Revenue & Customs
Updated
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Scope: What is chargeable: Land transactions: Deeds of rectification

Please note that this guidance has effect only for land in England & Wales, and Northern Ireland.

For most land transactions there is a contract followed by a completion document, for example a transfer or a lease. This completion document gives effect to what the parties agreed in the contract.

It should be noted however that some leases are not preceded by a contract.

It sometimes happens that the completion document does not correctly reflect what the parties agreed in the contract.

In such cases a further deed will normally be executed which, when read with the original deed, gives effect to what the parties agreed in the contract.

This process is called rectification. Sometimes rectification may be effected by Court order rather than by a deed.

There are no special Stamp Duty Land Tax rules for deeds of rectification, or indeed Court orders of rectification. Most deeds of rectification will effect a land transaction for Stamp Duty Land Tax purposes.

For example the original completion document may not have transferred all the freehold land that was agreed in the contract. The deed of rectification will effect the transfer of the land that was over looked, this will be a land transaction i.e. the transfer of the over looked freehold land.

Another example would be where the original completion document might not have reserved a right of way although the contract provided for this. The deed of rectification will then create a legal right of way, this again is a land transaction.

Most land transactions need to be notified to HM Revenue & Customs on a land transaction return form SDLT1 or electronic equivalent. Again there are no special rules for transactions effected by a deed of rectification.

When additional freehold land is transferred by a deed of rectification the transaction must be notified to HM Revenue & Customs where the transferee gives any consideration for the additional land.

This is subject of course to the provision where the consideration for the transfer is under £40,000. See SDLTM00330.

Where a legal easement such as a right of way or a restrictive covenant is created by a deed of rectification the transaction must be notified if there is tax to pay, or a relief to be claimed.

Where a land transaction effected by deed of rectification does not need to be notified to HM Revenue & Customs, for example because there is no chargeable consideration, it may be necessary to explain the circumstances and why no land transaction return is required, to the Land Registry.

Leases

Where the original transaction was the grant of the lease, a deed of rectification will normally operate as the variation of the lease. If so the normal Stamp Duty Land Tax rules on variations of leases apply.

However where the only effect of the deed of rectification is to increase the demise, the land which is the subject matter of the lease, the deed of rectification might operate as a supplemental lease for stamp duty land tax purposes.