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HMRC internal manual

Stamp Duty Land Tax Manual

Scope: When is stamp duty land tax chargeable: Contracts and substantial performance: Purchaser takes possession FA03/S44(5)(a): Example

Example 1 – Fitting out of property

If a person is allowed into possession for fitting out purposes this will represent substantial performance under FA03/S44(7)(a) see SDLTM08000) as the purchaser has taken possession of the premises. Also, these works will often trigger the first payment of rent which again will amount to substantial performance under FA03/S44(7)(a).

Example 2 – Right to receive rents

The Standard Conditions of Sale (Third Edition), very commonly incorporated into contracts for sale of property, provide at condition 5.2.2(e) that a purchaser who is permitted to enter a property in the above circumstance is entitled to any rents and profits from any part of the property which he does not occupy.

This would amount to substantial performance by virtue of FA03/S44(6)(a).

Typically, Condition 5.2.2 (e) will be excluded from the contract if the parties do not intend the purchaser to receive any income in practice. This could be done either at the time of the contract or when the purchaser goes into possession of the property.