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HMRC internal manual

Stamp Duty Land Tax Manual

Scope: When is Stamp Duty Land Tax (SDLT) chargeable: Contracts and substantial performance: Substantial performance prior to completion FA03/S44(4) & FA03/S44A(3)

Where a contract is substantially performed before completion both the substantial performance and any later completion of the same transaction should be notified to HM Revenue & Customs.

If the contract is for the transfer of a freehold or the assignment of an existing lease (codes F & A at 1.2 for the online return and box 2 of the paper SDLT1), the completion SDLT1 should be sent to the Stamp Office with a covering letter and a copy of the previous SDLT1 which notified substantial performance. 

However, if the contract is an agreement for the grant of a new lease, the grant of the new lease is treated as a separate (but almost certainly linked) transaction from the notional lease created by the substantial performance of the agreement for lease.

The surrender and re-grant mechanism with overlap relief should be used. If not notified an SDLT1 with code L’ at box 2 & SDLT4 need to submitted.

If overlap relief resulted in nil rent being entered on to the NPV calculator for the grant of lease, and there was no additional premium over and above what may have been notified in the notional lease, then this is considered as the grant of a lease for no chargeable consideration and is not notifiable.