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HMRC internal manual

Stamp Duty Land Tax Manual

Example 8, Exchanges subsales

  • 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 enters into a subsale agreement for Plot 1 with C, for consideration of £500,000 cash plus Plot 2. Plot 2 has a market value of £400,000. This is acceptable to B because the site of Plot 2 is commercially beneficial to B. The agreements are completed at the same time and in connection with each other.

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 the acquisition of Plot 1 from A but can claim relief.

B is also 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, that is, the value in money’s worth of Plot 1 apportioned on a just and reasonable basis between the cash consideration received by B and Plot 2 (£500,000). The larger amount 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. The consideration given by paragraph 1 of Schedule 4, read according to paragraph 9 of Schedule 2A, would give chargeable consideration of £900,000. So the chargeable consideration would be the larger amount of £1 million.