When are transactions linked?


“We are purchasing four titles from four different sellers pursuant to options. Two of the titles are currently garages and the others garden land – no dwellings are constructed on the garden land. We have planning to build two houses but the work has not started. Can this be treated as commercial/ mixed use for stamp duty and am I right to say the transactions are not linked since the vendors are all different?”

Source: BLG Member



Section 46(1)(a) FA 2003 provides that the acquisition of an option binding the grantor to enter into a land transaction is itself a land transaction distinct from any land transaction resulting from the exercise of the option. Therefore, both the grant and exercise of such an option may be chargeable to SDLT. The effective date of the transaction constituted by the acquisition of the option is the date on which the option or right is acquired, as opposed to when it becomes exercisable. Where the option is exercised between the original parties to the grant (or parties connected with them), the exercise and grant of the option will form a series of transactions to which section 108 (linked transactions) will apply, meaning that the grant and exercise of the option are treated as a single transaction in determining the rate of SDLT applicable to the consideration for the acquisition of the land, and any SDLT or additional SDLT payable in respect of the earlier grant.

That said, provided that the vendors are not connected within the meaning of section 1122 Corporation Tax Act 2010 the four purchases referred to in your query will not be linked.  The purchases will each be chargeable at the non-residential rates in Table B (set out in section 55 FA 2003) provided that construction of the new dwellings has not begun.

At the time of publication this response was correct however as tax legislation and practice change from time-to-time you should take specific advice before taking any action.

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