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Special rules apply for stamp duty land tax (SDLT) purposes where there is more than one sale and purchase between the same buyer and seller. It is important that property investors are aware of this as it may lead to a much higher SDLT bill than they were expecting. The rules outlined below apply for SDLT purposes on transactions in England and Northern Ireland.
Nature of linked transactions
Two or more property transactions that involve the same buyer and seller are treated as 'linked' for SDLT purposes where they are part of a single arrangement or a series of transactions. People connected to a buyer or seller may be treated as the same person as the buyer or seller for these purposes, so for example a transaction between a husband and a seller would be linked to a transaction between his wife and the same seller.
Under the linked transaction rules, SDLT is calculated by reference to the total value of all the linked transactions. Where all the properties are residential properties, the residential rates are used. However, if any or all of the properties are non-residential, the non-residential rates are used.
A single arrangement
Where more than one property is purchased by the same buyer from the same seller as part of a single arrangement, SDLT is calculated by reference to the total consideration for all properties rather than for each property individually.
Example
David is a property investor. He agrees with a developer to buy four new-build houses on a new development. The houses are priced at £400,000 each, but the developer gives David a 5% discount, so that he pays £1,520,000 for the properties.
SDLT is calculated using the residential rates inclusive of the 5% supplement for second and subsequent residential properties on the total consideration of £1,520,000. This results in an SDLT bill at the residential rates of £172,150. By comparison, if SDLT is calculated separately for each property by reference to the amount actually paid of £380,000 per property, SDLT of £28,000 is payable per property – a total of £112,000 for the four houses. Under the linked transaction rules, the SDLT bill is £60,150 more.
A series of transactions
Where a sale is followed by one or more related transactions between the same buyer and seller, the linked transaction rules apply. There is no limit on the time between the transactions for the rules to bite.
Where a transaction is followed by subsequent transactions, the SDLT must be calculated on the total consideration for the linked transactions at that point and apportioned to the properties in relation to their chargeable consideration. A subsequent linked purchase may increase the SDLT payable on an earlier transaction.
Example
Dawn buys an investment property from a builder in April 2025 for £300,000. She pays SDLT at the residential rates including the 5% supplement of £20,000. Later in the year she buys a further investment property from the builder for £500,000. The transactions are linked. The total consideration is £800,000, on which SDLT of £70,000 is payable. This is apportioned between the properties by reference to their chargeable consideration so that SDLT of £26,250 (3/8ths) relates to the first house costing £300,000 and SDLT of £43,750 relates to the second house costing £500,000. On the completion of the second purchase, she must pay not only SDLT of £43,750 in relation to that property, but also an additional £6,250 in respect of the earlier linked purchase.
Partner note: FA 2003, s. 108.