Understanding Section 75A: Objective Test for SDLT Tax Avoidance Legislation

SDLT Section 75A: Motive Does Not Matter

Section 75A is an SDLT anti-avoidance rule that looks at the overall effect of land transactions rather than the parties’ reasons for entering into them. It can apply if a series of steps produces less SDLT than a more direct property transfer, even where the arrangement was driven by genuine commercial reasons and not by tax avoidance.

• Section 75A does not include a “main purpose” or tax-avoidance motive test.
• The rule is applied objectively by looking at what the transactions achieved in SDLT terms.
• The Supreme Court in Project Blue Ltd v HMRC confirmed that motive does not prevent section 75A from applying.
• Commercial reasons for using a multi-step structure do not, by themselves, take a transaction outside the rule.
• Not every multi-step land deal is caught, but advisers must test the facts against the statutory conditions of section 75A.
• A practical review should map the steps, compare the SDLT outcome with a direct transfer, and then assess whether section 75A applies.

Scroll down for the full analysis.

SDLT section 75A: why motive does not matter

This page explains a key point about the SDLT anti-avoidance rule in section 75A. The important message is that section 75A is not limited to cases where someone set out to avoid tax. If the statutory conditions are met, the rule can apply because of what the transactions achieved, not because of why the parties entered into them.

What this rule is about

Section 75A was introduced to deal with arrangements that reduce or remove SDLT in a way that cuts across the intended effect of the SDLT rules. It is aimed at the overall result of a series of transactions involving land, rather than looking only at each step in isolation.

The source material is focused on one specific interpretive point: whether section 75A depends on proving a tax avoidance purpose. HMRC’s position, supported by the Supreme Court, is that it does not.

What the official source says

The official material says section 75A was introduced in 2006 in response to schemes and arrangements designed to reduce or eliminate SDLT contrary to the intention of the legislation.

But the legislation does not contain a “main purpose” test. That matters. Many anti-avoidance rules only apply if obtaining a tax advantage was the main purpose, or one of the main purposes, of the arrangements. Section 75A is different.

The source relies on the Supreme Court decision in Project Blue Ltd v Commissioners for Her Majesty’s Revenue and Customs [2018] UKSC 30. Lord Hodge said that section 75A can operate where a reduced SDLT liability, or no SDLT liability, resulted from the series of transactions the parties put in place, whatever their motive for structuring matters that way.

In other words, the test is objective. The question is whether the statutory conditions are met and whether the series of transactions produced a tax saving. The parties’ reasons, commercial aims, or lack of tax-avoidance intent do not by themselves prevent section 75A from applying.

What this means in practice

You cannot assume section 75A is irrelevant just because the transaction had a genuine commercial purpose, or because no one involved thought of it as tax avoidance. Those facts may matter in understanding the transaction, but they are not a substitute for analysing the statutory conditions.

For taxpayers and advisers, the practical consequence is that section 75A must be considered whenever a land deal is carried out through multiple connected steps and the overall SDLT outcome is lower than it might have been on a more direct acquisition.

This does not mean every multi-step transaction is caught. It means the analysis cannot stop at motive. The correct approach is to test the facts against section 75A itself.

How to analyse it

A sensible way to approach the issue is:

• Identify the land transaction or wider arrangement being looked at.
• Map the actual steps that took place, in order.
• Ask what SDLT result those steps produced.
• Ask whether that result was lower, or nil, compared with the charge that might arise on a more direct transfer of the property.
• Then test the facts against the statutory conditions in section 75A, rather than asking whether anyone had a tax avoidance motive.

The key discipline is not to treat “commercial reasons” as an answer to section 75A. A commercially driven structure can still fall within an objective anti-avoidance rule if the legislation says it does.

Example

Illustration: a property ends up with Buyer C, but instead of a straightforward sale from Seller A to Buyer C, the parties use a series of intermediate steps involving other parties. No one involved says the structure was chosen to avoid SDLT; they say it was used for financing or deal-management reasons. If those steps produce less SDLT than a direct transfer would have produced, section 75A may still need to be considered. The fact that the parties had non-tax reasons does not, on its own, take the case outside the rule.

Why this can be difficult in practice

The difficulty is that readers often expect anti-avoidance rules to depend on proving intention. Section 75A does not fit that pattern. That can feel counterintuitive.

Another difficulty is that the source material on this page deals only with purpose and intention. It does not set out all of section 75A’s conditions or how the deemed transaction is calculated. So while this page makes one point clearly—that motive is not required—it does not mean section 75A automatically applies whenever there is a tax saving. The statutory requirements still have to be worked through carefully.

The line between an ordinary structured transaction and one caught by section 75A can therefore be fact-sensitive. The legal question is not simply “was there a tax saving?” but “does the arrangement satisfy section 75A as enacted?”

Key takeaways

• Section 75A is an objective SDLT anti-avoidance rule.
• It does not require HMRC to show that tax avoidance was the parties’ main purpose, or any purpose at all.
• If a series of transactions produces a reduced SDLT liability, section 75A may need to be considered even where the arrangement had genuine commercial motives.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Understanding Section 75A: Objective Test for SDLT Tax Avoidance Legislation

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