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HMRC internal manual

Stamp Duty Land Tax Manual

Reliefs: Alternative property finance

Land sold to a financial institution and leased to an individual: Scotland: Detailedrules FA03/S72(1) and FA03/S72(5)

To benefit from this relief, arrangements must be entered into between an individualand a financial institution whereby the financial institution

  • purchases a major interest in land - the first transaction
  • grants the individual a lease, if the interest acquired is the interest of the owner, or a sublease, if the interest acquired is the tenant’s right over or interest in the property subject to a lease, out of that major interest purchased - the second transaction
  • 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 - the third transaction

For the purposes of FA03/S72(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/S72(5) provides that the third transaction is 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 all the other rulesare complied with, only one stamp duty land tax charge is payable.