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HMRC internal manual

Stamp Duty Land Tax Manual

From
HM Revenue & Customs
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Example 7, Exchanges - assignments

  • A enters into a sale and purchase agreement with B for Plot 1 with a consideration of £1 million which reflects the market value of Plot 1. B pays A a deposit of £500,000.
  • B assigns its interest under the contract to C in return for consideration of Plot 2 from C. Plot 2 is worth £400,000. This is acceptable to B because the site of Plot 2 is commercially beneficial to B.
  • On completion, C pays A £500,000 for Plot 1.

C has entered into one transaction as purchaser (the acquisition of Plot 1 by C) in consideration of entering into another transaction as vendor in another (the acquisition of Plot 2 by B). Section 47 and paragraph 5 of Schedule 4 apply.

B is chargeable on a notional land transaction under paragraph 5 for which relief can be claimed. The chargeable consideration is £1 million.

B is chargeable on the acquisition of Plot 2 from C. The chargeable consideration is determined by paragraph 5 of Schedule 4. This is the greater of the market value of Plot 2 (£400,000) and the amount B gave for it. B gave the value in money’s worth of the right to complete on Plot 1, that is £500,000. That amount cannot be apportioned in any way as it was not given for anything other than as consideration for Plot 2. So the chargeable consideration is £500,000.

C is chargeable on the acquisition of Plot 1. The chargeable consideration is given by paragraph 5 of Schedule 4. The market value of Plot 1 is £1 million. Paragraph 1 of Schedule 4, read according to paragraph 5 of Schedule 2A, would give chargeable consideration of £900,000 - the £500,000 given by C to A on completion plus the consideration given for the assignment, namely the £400,000 value of Plot 2. So the chargeable consideration would be the larger amount: £1 million.