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HMRC internal manual

Stamp Duty Land Tax Manual

From
HM Revenue & Customs
Updated
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Application: Transfer to a connected company: Example 2

Example 2

Individual A grants a new lease for residential property to company B in consideration of a release from a debt owed by A of £170,000.

SDLT considerations are:

1. Is A connected to B in accordance with S1122?
2. If so what is the market value of the property transferred?
3. What is the rent payable?

If A is not connected to B the chargeable consideration will be the value of the debt released - £170,000 at the rate applicable for residential property at the effective date of the transaction, plus any tax due at 1% on the NPV (less the current threshold) of the rent payable.

If A is connected to B, S53 applies and the chargeable consideration for the transaction will be the market value of the property at the effective date. If this were £275,000 this would be the chargeable amount, plus any tax due at 1% on the NPV (less the current threshold) of the rent payable. If, however, the market value were only £150,000 the chargeable consideration would be limited to that amount.