HMRC SDLT: SDLTM00330A – Scope: what is chargeable: land transactions: is notification required? examples

Principles and Concepts of Chargeable Land Transactions

This section of the HMRC internal manual provides guidance on the scope of chargeable land transactions and when notification is required. It includes examples to clarify the rules and ensure compliance.

• Defines what constitutes a chargeable land transaction.
• Explains the circumstances under which notification is necessary.
• Offers examples to illustrate the application of these rules.
• Aims to aid understanding and adherence to legal requirements.

SDLTM00330A – Scope: What is Chargeable: Land Transactions: Is Notification Required?

This guidance explains when you need to inform HMRC about land transactions, particularly regarding Stamp Duty Land Tax (SDLT). We’ll break down what is chargeable and when you must notify HMRC. Examples will help clarify these concepts.

Understanding Chargeable Consideration

Chargeable consideration refers to the value involved in a transaction that could trigger SDLT. In general:

• If money changes hands, that amount is chargeable.
• If property is transferred with no payment, you must still assess whether any liabilities, like a mortgage, are involved.

When is Notification Required?

You need to notify HMRC about a land transaction if:

• The transaction involves chargeable consideration.
• You are transferring property that is subject to a mortgage, even if no cash is exchanged.

Even if no SDLT is due, you may still be required to inform HMRC.

Examples of When Notification is Required

Example 1: Gift Without Chargeable Consideration

Consider a father who gifts a property worth £200,000 to his son without expecting any payment in return. The property is not mortgaged.

In this example:

• There is no chargeable consideration since no money changes hands.
• The transfer does not require notification to HMRC.

Example 2: Gift with Mortgage Responsibility

Now let’s look at a mother who gifts a property worth £200,000 to her daughter. In this case, there is a mortgage of £180,000 on the property at the time of the transaction, and the daughter agrees to take over that mortgage. She does not own any other properties.

In this situation:

• Since the daughter is assuming responsibility for the £180,000 mortgage, SDLT applies.
• The SDLT is due based on the mortgage amount, unless the First Time Buyers relief applies (more details can be found at First Time Buyers Relief Guidance).
• This transaction is notifiable because there is chargeable consideration – the mortgage value.

Example 3: Transfer Between Spouses

Another example involves a husband who wishes to transfer half of his only residential property, valued at £300,000, to his wife. No cash is exchanged, but the property has a mortgage of £200,000. The wife has owned property in the past but does not own any at the time of the transfer.

In this case:

• The husband is transferring half of the property’s value, meaning the wife takes on half of the mortgage debt.
• Half of the property’s value is £150,000, and half of the mortgage is £100,000. The chargeable consideration here is £100,000.
• No SDLT is owed because the amount is below the tax threshold.
• However, the transaction must still be notified as it involves a transfer of property and a mortgage assumption.
• Note: First Time Buyers relief and Higher Rates for Additional Dwellings do not apply in this situation. For additional guidance, see SDLTM04040.

Key Points to Remember

When considering whether to notify HMRC about a land transaction, keep the following points in mind:

• Determine if there is chargeable consideration; this includes any assumptions of mortgage debt.
• Even if no SDLT is due, you might still need to inform HMRC about the transaction.
• Gifts of property and transfers between family members can still require notification based on the details of the transaction.

Further Information

For anyone involved in land transactions, understanding our obligations regarding SDLT and the notifications required is essential. Seek professional advice if you are unsure about the specifics of your situation, especially regarding mortgages and property transfers. For additional resources and in-depth guidance, refer to relevant HMRC publications.

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