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HMRC internal manual

Stamp Duty Land Tax Manual

From
HM Revenue & Customs
Updated
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Reliefs: Alternative property finance

Land sold to a financial institution and leased to an individual: England & Walesand Northern Ireland: Detailed rules FA03/S71A(1) and FA03/S71A(5)

To take advantage of this relief arrangements must be entered into between anindividual and a financial institution whereby the financial institution

  • purchases a major interest or an undivided share of a major interest in land - the first transaction.

If an undivided shared of the major interest is purchased, the major interest must be held in trust for the financial institution and the individual as beneficial tenants in common

 

  • grants the individual a lease if a freehold has been acquired, or a sublease if a leasehold has been acquired, out of the major interest purchased - the second transaction.

If an undivided share in the major interest was purchased the trustees grant the lease or sub-lease

 

  • enters into an agreement where the individual has a right to require the institution, or its successor in title, to transfer that major interest purchased - further transactions.

This can be in one transaction or in a series of transactions

For the purposes of FA03/S71A(1) relief is not available if that individual

  • enters into the arrangements, or holds the lease or sublease, as a trustee and any beneficiary of the trust is not an individual
  • enters into the arrangements, or holds the lease or sublease, as a partner and any of the other partners is not an individual

This ensures that relief is not available where any of the benefit of the relief couldaccrue to a person who is not a living individual at the time the arrangements are enteredinto.

FA03/S71A(5) provides that the further transactions are not to be treated

  • as substantially performed by taking possession or paying a substantial amount of the consideration, so disapplying FA03/S44(4)
  • as the grant of an option to which FA03/S46 applies

This subsection disapplies various provisions which may have effect.

It ensures that, where the arrangements are completed in the manner provided for, and allthe other rules are complied with, only one stamp duty land tax charge is payable.