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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: alternative finance arrangements FA03/SCH4A/PARA6A

Special rules apply where the major interest in land acquired under the ‘first transaction’ in an alternative finance arrangement includes a higher threshold interest. These rules apply to the alternative finance arrangements defined under FA03/SS71A/72/73. (See SDLTM28000 for more detail.)

These rules are necessary so that the person who is intended to own the property at the end of the alternative finance arrangement is considered when the financial institution initially acquires the property. This will ensure that the correct amount of SDLT is paid at that first transaction and that the same tax consequences arise as for acquisitions made without alternative finance arrangements.

The ‘first transaction’ has the same meaning as in section 71A(1)(a), 72(1)(a) or 73(1)(a)(i) of FA 2003. The ‘second transaction’ has the same meaning as in section 71A, 72 or 73 (as the case requires).

The higher rate of SDLT will not apply to the first transaction simply because the purchaser is a financial institution which is a company or other person normally within the scope of the higher rate of SDLT.

The higher rate of SDLT will, however, apply to the first transaction where the ownership condition is met in respect to the second transaction. That is to say, where the person to whom the property is to be transferred under the second transaction is a company, or the purchase is made by or on behalf of a partnership with a corporate member or for the purposes of a collective investment scheme.

But, if the person to whom the property is to be transferred under the second transaction would meet the relevant conditions, for example if they were to use the property in a property rental business, then the higher rate will not apply to the first transaction. This does not apply to the exclusion for financial institutions acquiring dwellings in the course of lending.