Further Reading. Higher Rate Case Studies 

Example: SDLT and Ownership of Overseas Properties

(Higher Rate Case Studies)

➤ If Amelia and Ben own overseas properties worth €40,000 or more, they will face higher Stamp Duty Land Tax (SDLT) rates on their new property purchase, as each buyer’s property interests are assessed separately.

Facts: Amelia and Ben are buying a property together after living with their parents. It will be their first property as owner/occupiers. The only other properties they own are a house rented out in Italy worth €70,000 and a holiday home in Greece worth €65,000.

Scenario A: Amelia owns the Italian property, and Ben owns the Greek one.

Scenario B: The Italian and Greek properties are owned equally, with each of Amelia’s and Ben’s shares worth less than €40,000.

Analysis:

Scenario A: The higher rates of SDLT (Stamp Duty Land Tax) are due. All of Conditions A–D under paragraph 3 are met for each of Amelia and Ben. This includes Condition C, which involves considering other property interests owned anywhere in the world.

Conditions Under Paragraph 3:

• Condition A: Chargeable consideration is €40,000 or more.
• Condition B: The property is not subject to a long lease.
• Condition C: The buyer has other property interests.
• Condition D: The replacement exception does not apply.

When multiple purchasers are involved, the tests are applied to each buyer individually. If the higher rates are due for any one of them, they apply to the entire transaction.

In Scenario A, both Amelia and Ben have an interest worth €40,000 or more in another dwelling, satisfying Condition C, along with Conditions A, B, and D.

Scenario B: The higher rates of SDLT are not due. Condition C is not met for either Amelia or Ben because neither has a share worth €40,000 or more in any one dwelling. HMRC guidance (SDLTM09780 and SDLTM09785) confirms that the value of each share, not the value of the entire dwelling, should be considered.

Even if Amelia and Ben were spouses, their interests are not aggregated, and they are not treated as a single unit for SDLT purposes. The legislation specifies this separation, overriding any indications to the contrary from HMRC.

Key Points:

• Linked Transactions: When multiple properties are purchased from the same seller, they are considered linked for SDLT purposes.
• Ownership Interests: SDLT higher rates apply if any buyer has an interest worth €40,000 or more in another property worldwide.
• Separate Assessments: Each buyer’s property interests are assessed separately, and higher rates apply if any buyer individually meets the conditions.

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Example: “Buying a First Home with Parental Assistance”

(Higher Rate Case Studies)

➤ If parents co-own a first home with their child and already own another property, higher SDLT rates apply, but if they only provide financial support without ownership, higher rates do not apply.

Scenario

Facts: Alex is purchasing his first home but requires financial assistance from his parents. Alex has a 10% deposit and can secure a loan for 60% of the property’s value from a commercial lender. Alex’s parents, who own a home valued at £100,000 or more, will provide the remaining 30% as financial support. There are multiple financing and ownership structures available through mortgage brokers.

Analysis

Scenario A: Parental Co-Ownership

• Alex’s parents take a 30% ownership share in the property.
• SDLT Implications: The higher rates of SDLT apply because all conditions (A–D) are met for Alex’s parents. Even if the property is in Alex’s name, with him holding it in trust for himself and his parents, the higher SDLT rates are due. Each purchaser is assessed individually, and if higher rates apply to any one of them, the entire transaction is affected. Since Alex’s parents already own a property, the higher SDLT rates are triggered for this purchase.

Scenario B: Parental Financial Assistance Without Ownership

• Alex’s parents provide the money either as a gift or a loan without taking a beneficial interest in the property.
• SDLT Implications: The higher rates of SDLT do not apply. Alex is considered the sole purchaser, and since he does not own another property, he does not trigger the higher rates. Even if the property is registered in the names of Alex and his parents, holding it in trust solely for Alex, the SDLT implications remain the same—higher rates do not apply.

Key Points:

• Higher Rates Triggered by Co-Ownership: When parents take a share in the property, higher SDLT rates are due if they already own another property.
• No Higher Rates for Sole Ownership with Financial Assistance: When parents provide financial support without taking ownership, higher SDLT rates do not apply.

Joint Borrower Sole Proprietor Mortgages

• Confusion and Clarification: There has been confusion regarding “joint borrower sole proprietor” mortgages. The property being “in the name of” one owner, even with a declaration of trust, does not escape higher rates if the underlying ownership conditions trigger them. 

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Example: Timing of Marriage and SDLT Implications

(Higher Rate Case Studies)

➤ If John and Jane marry before Jane buys a property, higher SDLT rates apply due to John’s existing property, but if they marry after the purchase, higher rates do not apply.

Facts: John and Jane are engaged. John owns Property X, while Jane does not own any property. Jane plans to buy Property Y, which will be in her name alone.

Scenario 1: They marry before Jane completes the purchase of Property Y.

Scenario 2: They marry after Jane completes the purchase of Property Y.

Analysis:

Scenario 1: The higher rates of SDLT (Stamp Duty Land Tax) are applicable because all conditions (A to D) are met for John. Since John and Jane are married, the transaction is treated as if it would be a higher rates transaction if the spouse was also a purchaser. The SDLT rules require applying the tests to both John and Jane. If either meets the conditions for higher rates, the higher rates apply to the entire transaction.

• John’s Situation: John owns Property X, so the higher rates would be due if he were purchasing Property Y.
• Jane’s Situation: Jane does not own any other property, so higher rates would not apply to her alone.

Since John’s property ownership triggers the higher rates, Jane’s purchase of Property Y before their marriage completion results in higher SDLT rates.

Scenario 2: The higher rates are not applicable. The purchase is treated as made by Jane alone, who does not own any other property. Thus, Condition C (ownership of additional property) is not met, and the higher rates do not apply.

Summary

• Scenario 1: Higher SDLT rates apply because the conditions are met for John, who owns another property.
• Scenario 2: Higher SDLT rates do not apply because the purchase is treated as Jane’s alone, and she does not own any other property.

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Example. Assessing Foreign Property Interests for SDLT

(Higher Rate Case Studies)

➤ If Alex’s interest in an overseas apartment is considered a “major interest” under foreign law, higher SDLT rates apply to his UK property purchase; if not, higher rates do not apply.

Facts:

Alex is buying the only property he will own in the UK. Alex explains that he is also in the process of purchasing an apartment overseas that is still under construction. He states that agreements for purchase and sale are in place and much of the payment has been made, but not the full amount, and the “strata title” has yet to be issued, although a lender has advanced money towards the sums paid so far.

Scenario A:

Under the foreign law, the interest Alex holds in the apartment at the date of the completion of the UK purchase is equivalent to a “major interest,” despite not having paid the full price.

Scenario B:

Under the foreign law, the interest Alex holds in the apartment at the date of the completion of the UK purchase is not equivalent to a “major interest.”

Analysis:

Scenario A:

The higher rates of SDLT are due because all Conditions A – D in Paragraph 3 are met. A building under construction is considered a “dwelling.”

Scenario B:

The higher rates of SDLT are not due. Condition C is not met because Alex does not have another property counting against him.

Explanation:

Scenario A:

When Alex’s interest in the overseas apartment is regarded as a “major interest” under foreign law, it means that for SDLT purposes, he is considered to own an additional property. Consequently, the higher rates of SDLT apply to his UK purchase, as he meets all necessary conditions, including owning a “major interest” in another dwelling.

Scenario B:

If the foreign property interest Alex holds is not considered a “major interest” under the applicable foreign law, then for SDLT purposes, he is not considered to own another property. Thus, the higher rates of SDLT do not apply to his UK purchase, as he does not meet Condition C, which requires ownership of another property.

Conclusion:

This case study illustrates the importance of understanding the classification of property interests under foreign law when assessing SDLT liabilities in the UK. The classification can significantly impact whether higher SDLT rates are applicable.

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Example: “Living Together In Different Cities”

(Higher Rate Case Studies)

➤ If Jane owns a home, higher SDLT rates apply to John’s new house purchase; if Jane rents, higher rates do not apply.

Facts:

John and Jane are a married couple with a unique living arrangement. Each has school-age children from previous relationships and they live 150 miles apart, in Leeds and Birmingham respectively. John works in Leeds, while Jane works in Birmingham. Their children are well-settled in local schools.

John and Jane meet most weekends, alternating between their homes and often staying at Jane’s parents’ house, which is located halfway between the two cities in Nottingham.

John needs a larger house in Leeds as his children are growing up and plans to sell his current home and buy another. Jane will remain based in Birmingham.

Scenario A:

Jane owns her home in Birmingham.

Scenario B:

Jane rents her home in Birmingham and does not own a property.

Analysis:

Scenario A: The higher rates of SDLT are applicable on John’s purchase of a replacement home as all conditions A-D are satisfied for Jane. This means the transaction is treated as subject to higher rates because it would have been considered a higher rates transaction if Jane, being a spouse, was also a purchaser.

• The criteria for “living together” focus on the relationship rather than sharing a home. The tests must be applied to both John and Jane. If higher rates apply to either, they apply to the whole transaction.
• For John alone, he would not be liable to higher rates due to failing Condition C (no other property ownership) and Condition D (replacement exception applies).
• Applying the criteria to Jane, she owns another property and cannot use the replacement exception as she will not live in the new property. Thus, higher rates apply because Jane’s situation triggers them, affecting John’s purchase.

Scenario B: Higher rates do not apply. Although the tests are applied to both John and Jane, this time Jane does not own another property. John avoids the surcharge as before by failing Conditions C and D, and now Jane also avoids it by failing Condition C.

Note:

The rules in Scotland for Land and Buildings Transaction Tax and the Additional Dwellings Supplement are stricter. Scottish laws treat spouses, civil partners, and cohabitants as owning any property belonging to the other, which differs from SDLT rules.

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Example: Inheriting and Purchasing Property

Higher Rate Case Studies)

➤ If Francis inherits a rental property and buys his first home, higher SDLT rates apply, but if he sold a previous home within the last three years, higher rates do not apply.

Scenario: Inheriting and Buying Property Francis inherits a house that he has never lived in and decides to retain it as a rental property. He has been living in rented accommodation for the last two years and now plans to buy a property to live in.

Scenario A: First Property Ownership

This is the first property Francis has both owned and lived in. Since all the conditions for higher SDLT rates are met, he will be subject to these rates. Although Francis has been living in rented accommodation, he cannot use this to claim the replacement exception since he has not disposed of a “major interest” in a property. Additionally, Francis cannot claim relief for recently inherited properties because he inherited the entire house rather than a share not exceeding 50%.

Scenario B: Previously Owned Property

Francis previously owned and lived in a property until two years ago when he sold it. In this case, higher SDLT rates are not applicable because he meets the conditions for the replacement of a main residence. He can use the sale of his previous property, which occurred within the last three years, to qualify for the replacement exception.

Detailed Analysis

Scenario A:

• Higher Rates Applicable: All conditions for higher SDLT rates are met.
• No Major Interest Disposal: Francis’s previous rental accommodation does not count towards the replacement exception because he did not own it.
• Inherited Property: No relief for inherited property since he inherited the whole house.

Scenario B:

• Replacement Exception Applies: Francis sold a property he lived in within the last three years.
• Conditions for Replacement Exception:
  • Francis must intend to live in the new property as his main residence.
  • He must have disposed of a major interest in another property within the last three years.
  • Neither he nor his spouse/civil partner can retain an interest in the sold property.
  • He must have lived in the sold property as his main home within the three years before buying the new one.
  • Since selling the previous property, neither he nor his spouse/civil partner should have acquired another property as their main residence.

Key Points for Replacement Exception:

1. The new property must be intended as the only or main residence.
2. The previous main residence must have been sold within three years.
3. No interest in the previous property should be retained.
4. The previous property must have been lived in as the main home within the last three years.
5. No other property should have been acquired as the main residence since the sale.

Francis meets these conditions, so the replacement exception applies, and higher SDLT rates are not due in Scenario B.

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Example: Buying Two Properties After Selling a Home

(Higher Rate Case Studies)

➤ If Glen buys his new home first, higher SDLT rates only apply to the second property, but if he buys the investment property first, higher rates do not apply to either.

Scenario: Glen sells his only residence and plans to use the proceeds to buy two new properties. Property 1 will be his new main residence, and Property 2 will be an investment property to rent out.

Scenario A: Glen buys Property 1 first, followed by Property 2. Scenario B: Glen buys Property 2 first, followed by Property 1 within three years of selling his previous home.

Analysis:

Scenario A:

• Property 1:
  • Higher SDLT rates do not apply because Glen is buying it as his new main residence. The replacement exception is met since there are no other property interests affecting the purchase.
• Property 2:
  • Higher SDLT rates apply because it is an additional property, fulfilling all conditions required for the higher rate to be imposed.

Scenario B:

• Property 2:
  • Higher SDLT rates do not apply because, at the time of purchase, it is the only property Glen owns.
• Property 1:
  • Higher SDLT rates do not apply. The purchase qualifies for the replacement exception since it is intended to be Glen’s main residence, and the acquisition of Property 2 in between does not impact this status as it was not intended to be a main residence.

Note: In Wales, under Land Transaction Tax (LTT) rules, an “intermediate transaction” like the purchase of Property 1 in Scenario B would trigger a delayed tax charge when Property 2 is later acquired.

Example: “Corporate Manoeuvres”

(Higher Rate Case Studies)

➤ If Julia keeps her flat and buys a luxury house, she pays higher SDLT rates, but if she transfers the flat to a company first, she avoids the extra 3% surcharge on the new house.

Facts: Julia owns a flat worth £200,000, where she lives. She also has several rental properties. After receiving a significant sum of money, she decides to buy a luxurious house for £5 million but does not want to sell her flat or other properties.

Scenario A: Julia retains ownership of her flat and buys the luxury house.

Scenario B: Julia transfers the flat to a UK limited company that will rent it out, and then she buys the luxury house.

Analysis:

Scenario A:

In this scenario, the higher rates of Stamp Duty Land Tax (SDLT) apply to the purchase of the new house. The extra 3% surcharge for additional properties is applicable because Julia retains ownership of her flat. Therefore, the SDLT on the £5 million house is:

• Additional 3% surcharge: £5,000,000×3%=£150,000£5,000,000×3%=£150,000
• Total SDLT, including the standard rate, is calculated as follows:
  • 0% on the first £250,000 = £0
  • 5% on the next £675,000 (£925,000 – £250,000) = £33,750
  • 10% on the next £575,000 (£1.5 million – £925,000) = £57,500
  • 12% on the remaining £3.5 million (£5 million – £1.5 million) = £420,000

£0+£33,750+£57,500+£420,000+£150,000=£661,250

Scenario B:

Here, the higher rates of SDLT do not apply to Julia’s purchase of the new house. Since she has transferred the flat to a company, Condition D (related to replacing the main residence) is not met by Julia personally. Thus, she qualifies for the exception from higher rates, and her purchase of the £5 million house will be at the standard SDLT rate without the 3% surcharge.

• SDLT Calculation for the £5 million house:
  • 0% on the first £250,000 = £0
  • 5% on the next £675,000 (£925,000 – £250,000) = £33,750
  • 10% on the next £575,000 (£1.5 million – £925,000) = £57,500
  • 12% on the remaining £3.5 million (£5 million – £1.5 million) = £420,000

£0+£33,750+£57,500+£420,000=£511,250£0+£33,750+£57,500+£420,000=£511,250

• However, the UK limited company will pay SDLT at the higher rates on the flat valued at £200,000:
  • SDLT for the company: £200,000×3%=£6,000£200,000×3%=£6,000

Summary:

• Scenario A: Higher SDLT rates apply, leading to a total SDLT of £661,250 on the new house.
• Scenario B: Julia purchases the luxury house without the 3% surcharge, resulting in a total SDLT of £511,250 for the house, but the company pays £6,000 in SDLT for the flat.

This analysis highlights the SDLT implications of owning multiple properties and utilising corporate entities in property transactions. By transferring a property to a corporate entity, Julia can significantly reduce her SDLT liability on the new luxury house.

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Example Scenario: SDLT and Property Transactions

(Higher Rate Case Studies)

➤ If Alex and Taylor sell Alex’s house before marriage, higher SDLT rates apply to their new home, but if they sell after marriage, they avoid the higher rates.

Scenario: “Taxing Decisions”

Facts: Alex and Taylor are an engaged couple, each owning a property acquired before they met. Both properties were originally their respective homes. They have lived in Alex’s house for four years as their only residence, while Taylor’s house has been rented out for four years. Taylor used to live in it, but Alex never has. They plan to sell Alex’s house, move out, and buy a new home together as their only residence, with Taylor retaining the rental property.

Scenario A: Selling Before Marriage They plan to sell Alex’s house before getting married.

Scenario B: Selling After Marriage They plan to sell Alex’s house after getting married.

Analysis:

Scenario A: The higher rates of SDLT apply because all conditions (A – D) are met for Taylor, although not for Alex. Each individual’s SDLT liability is assessed as if they were buying alone. If either person meets the criteria for higher rates, then the higher rates apply to the entire transaction.

Scenario B: The higher rates do not apply. A person can rely on the sale of a property by their spouse, provided they have lived in it personally. Taylor can rely on the sale by Alex since Taylor has lived in Alex’s house, and they were married at the time of sale. Thus, Condition D is not met, and the exception for replacing a main residence applies, exempting them from the higher rates.

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Example: Managing Property Ownership in Marriage

(Higher Rate Case Studies)

➤ If Alexa and Jordan sell Alexa’s house, they avoid higher SDLT rates on their new home, but if they sell Jordan’s house, higher rates apply.

Facts:

Alexa and Jordan are a married couple, each owning a property acquired before they met. These properties were originally used as their respective homes. They have been living in Alexa’s house for the past two years as their main residence. Jordan’s property has been rented out during this period, with Jordan having lived in it until two years ago, but Alexa has never lived there.

They are planning to sell one of the two properties and purchase a new home to live in, while keeping the other property as a rental.

Scenario A

Jordan’s house (which Alexa has never lived in) will be sold, and Alexa’s house will be kept and rented out.

Scenario B

Alexa’s house (where they currently live) will be sold, and Jordan’s house will be kept and continue to be rented out.

Analysis:

Scenario A: The higher rates of SDLT (Stamp Duty Land Tax) apply as all conditions (A to D) are met for Alexa, who has never lived in Jordan’s house. The SDLT tests are applied to both Alexa and Jordan as if they were buying alone. If either one would be liable for the higher rates, the higher rates apply to the transaction as a whole. This would be the case even if only Jordan acquired the new property.

Scenario B: The higher rates of SDLT do not apply. The SDLT tests must be applied to both Alexa and Jordan as if they were buying alone.

• Conditions C and D are not met for Alexa, meaning Alex would not be liable for the higher rates if buying alone.
• One spouse can rely on the sale by the other spouse to avoid higher rates if they lived in the property. Thus, Jordan can rely on the sale of Alexa’s house, as Jordan lived there and was married to Alexa when it was sold. Condition D is not met for Jordan, and the exception for replacing the main residence applies.

Key Points:

• When selling one property and buying another as a main residence, SDLT higher rates can be avoided if the property sold was used as the main residence and the new property will also be the main residence.
• Both spouses’ situations are considered independently to determine SDLT liability.
• Exceptions apply when one spouse relies on the other’s property sale if they lived there during the sale and were married at that time.

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Example: Retaining the Family Home After Separation

(Higher Rate Case Studies)

➤ If Adam lets Anna stay in the family home without a court order, higher SDLT rates apply to his new property, but if there’s a court order, he avoids higher rates.

Facts

Anna and Adam are married and jointly own their former family home. They separated four years ago, and Anna continues to live in the family home with their children. Given the children’s ages, they expect to remain in the home for at least another three years. Adam has been renting accommodation for four years and is now looking to purchase his own property. Neither Anna nor Adam have any other property interests. They are separated but not divorced.

Scenario A

Adam agrees to let Anna and the children stay in the family home without a formal court order.

Scenario B

There is a consent order that includes a “property adjustment order” for Anna and the children’s benefit, allowing them to live in the family home until the children finish their higher education.

Analysis

Scenario A

Under Scenario A, the higher rates of Stamp Duty Land Tax (SDLT) apply to Adam as all conditions A through D are met. Since Adam and Anna are separated in circumstances likely to be permanent, Adam is liable for the higher rates even though no court order formalises Anna’s continued residence in the family home.

Scenario B

In Scenario B, a change introduced in the Autumn Budget of 2017 provides an exception for “property adjustment on divorce, dissolution of civil partnership, etc.” This means that Adam’s share in the former family home does not count against him for SDLT purposes if a court order has been made for Anna and the children’s benefit and they live in the home, while Adam does not. This exemption protects Adam from higher SDLT rates under Condition C, as stipulated in the SDLT manual and tax regulations.

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Example: “Navigating SDLT in Breakups: A Potential Pitfall”

(Higher Rate Case Studies)

➤ If Alex buys a new home before selling the joint home, he can reclaim the higher SDLT later, but Jamie will still pay higher rates; if both buy after selling, neither pays higher rates.

Scenario Analysis

Case Study: Alex and Jamie were a couple but recently separated. Their jointly owned former home is to be sold, with each planning to buy their own property to live in. They both have other property interests.

Scenario A:

• Alex’s Purchase: Alex buys a new home before the sale of the former joint home, while Jamie buys theirs after the sale.
• Jamie’s Purchase: Jamie buys a new home after the sale of the former joint home.

Scenario B:

• Both Alex and Jamie buy their new homes on the same day as, or after, the sale of their former joint home.

Scenario A Analysis

• Alex’s Purchase:
  • Initially, Alex must pay the higher SDLT rates on his new home because the former joint home is still owned.
  • Alex can claim a refund for the extra 3% SDLT once the former joint home is sold, as per Condition D.
  • This will mean the higher rates do not apply to Alex’s new home after the sale of the joint home.
• Jamie’s Purchase:
  • Jamie will be liable for the higher rates of SDLT because all conditions (A-D) are met.
  • A trap arises from paragraph 8 of the SDLT rules: since Alex is entitled to recover SDLT from the sale of the former joint home, the same sale cannot be used by Jamie to qualify for an exemption.
  • Consequently, Jamie cannot claim the replacement exception for their new purchase, resulting in higher SDLT.

Paragraph 8 Trap Explanation:

• If a previous home sale allows one party to recover the 3% surcharge on an earlier purchase, this same sale cannot be used for the replacement exception for a later purchase.
• The trap triggers if there is an entitlement to recover the 3% surcharge, regardless of whether the money has been reclaimed or if it’s too late to do so.
• The trap does not trigger if both parties buy new properties after selling the joint home but does if one buys before and one after the sale.

Scenario B Analysis

• Joint Timing:
  • If Alex and Jamie both buy their new homes on the same day as, or after, the sale of their former joint home, neither pays the higher SDLT rates.
  • Condition D fails, and the replacement of the main residence exception applies.
  • The paragraph 8 trap does not apply as neither is entitled to reclaim the 3% surcharge from the sale of the former joint home.

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Example: SDLT and Lease Extension Scenarios

(Higher Rate Case Studies)

➤ If Alex extends the lease on his apartment, higher SDLT rates apply unless the apartment replaced a previous main residence sold within the last three years.

Scenario: Lease Extension

Facts: Alex has lived for two years in a leasehold apartment he owns. He also owns a freehold property that he rents out. The lease term on the apartment was down to 35 years, so Alex is acquiring a lease extension for £200,000. The extension operates as a surrender and regrant of the lease in the usual way.

Scenario A: The apartment was the first property Alex ever owned and lived in as an owner-occupier.

Scenario B: The apartment replaced a previous property that Alex had lived in and sold within the last three years.

Analysis:

Scenario A: The higher rates of SDLT are due because all conditions A to D are met:

• Condition A: The chargeable consideration is more than £40,000.
• Condition B: The property is not subject to a long lease.
• Condition C: Alex owns other property interests.
• Condition D: The replacement exception does not apply because the extension is a major interest in the same dwelling, not a different one.

Scenario B: The higher rates are not due because Condition D fails. The exception from the higher rates for the replacement of an only or main residence applies. In this scenario, Alex benefits from the replacement exception because the apartment replaced a previous main residence within the past three years.

Conclusion:

In Scenario A, Alex is subject to higher SDLT rates due to the fulfilment of all conditions for additional property rates. In Scenario B, Alex benefits from the replacement exception, avoiding the higher SDLT rates. The new “Exception where purchaser has prior interest in purchased dwelling” would only apply if Alex had lived in the leasehold apartment throughout the three-year period leading up to the acquisition of the extended lease.

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Example: “Separate Properties Not Subsidiary”

(Higher Rate Case Studies)

➤ If Emily buys a main house and a nearby cottage together, higher SDLT rates apply to both, but if bought separately, higher rates apply only to the cottage.

Facts:

Emily is buying a main house with an additional cottage a few houses down the street. The seller is open to selling the properties together or separately. The main house is valued at more than two-thirds of the total value. Emily owns other properties but has recently sold an apartment she used to live in. Emily plans to reside in the main house.

Scenario A: Emily buys both properties in one transaction (one contract and one transfer at completion).

Scenario B: Emily buys both properties in separate transactions (two contracts and two transfers).

Analysis:

Scenario A:

• Higher Rates of SDLT: Due on the single transaction for both properties as all conditions in paragraph 5(1) are met. For a single transaction, either the standard rates or the higher rates apply, never a combination.
• Cottage Not Subsidiary: The cottage does not count as “subsidiary” to the house under paragraph 5(5) because it is several houses away and not within the grounds of the main house.
• No Replacement Exception: There is no replacement exception in paragraph 5.
• Multiple Dwellings Relief: Emily could claim multiple dwellings relief.

Scenario B:

• Separate Transactions: Each transaction must be evaluated separately to determine if the higher rates apply.
  • House Purchase: The higher rates are not due on the purchase of the main house because Condition D is not met; the exception for the replacement of an only or main residence applies.
  • Cottage Purchase: The higher rates apply to the purchase of the cottage as Conditions A to D are all met.
  • Linked Transactions: If the transactions are linked, the calculation of SDLT becomes more complex, potentially involving a claim for multiple dwellings relief.