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HMRC internal manual

Stamp Duty Land Tax Manual

From
HM Revenue & Customs
Updated
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Scope: when is Stamp Duty Land Tax (SDLT) chargeable: higher rate charge for acquisitions of residential property by certain non-natural persons FA03/S55/SCH4A: transactions involving more than one interest in the same dwelling FA03/SCH4A/PARA4

Where a person, or persons connected with him, acquire more than one separate interest (whether simultaneously or over time) in a single dwelling from the same person, or persons connected with that person, those interests are to be regarded as within the higher rate charge if the consideration given for all the interests acquired totals more than the higher rate threshold. Each separate transaction will then treated as a higher threshold interest and will be chargeable to SDLT at the higher rate.

The transactions concerned must be “linked transactions” for SDLT purposes - see FA03/S108. Whether one person is connected with another is to be determined in accordance with FA03/S108.

Example

On 1 April 2014 a company purchases a 40 per cent interest in a freehold property from an individual owning the freehold so that the company and the original freeholder are now tenants in common. The 40 per cent interest costs £400,000. The higher rate charge does not apply to this transaction as the interest is not a higher threshold interest.

Later, a second company (that is grouped with the first company) acquires the 60 per cent interest in the property from the individual. That company gives consideration of £1 million. FA03/SCH4A/PARA4 treats the transactions as acquisitions of higher threshold interests, as the chargeable consideration for the two exceeds the higher rate threshold.

A return will be required for the later (£1 million) transaction. At the same time, a further return will be required for the earlier transaction, assessing the additional duty payable in respect of that transaction.