Guidance on SDLT for Disregarded Land Transactions Under Section 75C

How SDLT Already Paid Is Treated Under Section 75A

Where section 75A applies and replaces an actual land transaction with a notional transaction, any SDLT already paid on the disregarded transaction is not lost. It is treated as a payment towards the SDLT due on the notional transaction between the vendor and purchaser, and any extra tax due must still be paid.

• Section 75A is an anti-avoidance rule used where arrangements reduce SDLT below what a direct property transfer would have produced.
• If an actual transaction is disregarded under section 75A, SDLT already paid on it is credited against the SDLT due on the notional transaction.
• The notional transaction is treated as taking place between V and P, and an SDLT return is required for it.
• If the SDLT due on the notional transaction is more than the amount already paid, the difference must be paid.
• The main practical issues are whether section 75A applies, which transactions are disregarded, and how much earlier SDLT can be matched against the new liability.

Scroll down for the full analysis.

How SDLT already paid is treated when section 75A creates a notional transaction

This page explains a narrow but important point in the SDLT anti-avoidance rules. If a real land transaction is later disregarded under section 75A, SDLT already paid on that disregarded transaction is not simply ignored. Instead, the amount already paid is treated as having been paid towards the SDLT due on the notional transaction that section 75A substitutes. Any extra SDLT due on that notional transaction must then be paid.

What this rule is about

Section 75A is an anti-avoidance provision. It applies where a series of transactions or arrangements produces a lower SDLT outcome than a direct transfer of the property would have produced. If the provision applies, the legislation can disregard certain actual land transactions and replace them with a notional land transaction.

The manual page deals with what happens to SDLT that has already been paid on one of the actual transactions that section 75A later disregards. Without a rule on this point, there could be uncertainty over whether that earlier payment is lost, refunded automatically, or credited in some way. The official position is that the payment is carried across to the section 75A notional transaction.

What the official source says

The source states that where SDLT has been paid on a land transaction that is disregarded under section 75A, that amount is treated as having been paid for the notional transaction between V and P.

In section 75A language, V is the vendor and P is the purchaser for the purposes of the notional transaction that the legislation constructs. A return is required for that notional transaction. If the SDLT due on the notional transaction is more than the amount already paid on the disregarded transaction, the difference must be paid.

What this means in practice

In practical terms, this is a crediting rule. It prevents SDLT already paid on a transaction that section 75A later disregards from being wasted. But it does not cap the liability at what was originally paid.

The practical effect is usually as follows:

• one or more real transactions took place and SDLT was paid on at least one of them;
• section 75A is then considered to apply;
• the legislation treats there as being a notional transaction between V and P;
• the earlier SDLT payment on the disregarded transaction is treated as a payment towards the SDLT due on that notional transaction; and
• if the notional transaction gives rise to a higher SDLT charge, the balance must be paid.

This matters because section 75A can produce a larger SDLT charge than the tax paid on the steps actually undertaken. The manual makes clear that the earlier payment is not the end of the matter. It is only part-payment of the liability on the notional transaction.

How to analyse it

If this issue arises, the key questions are:

• Has section 75A been engaged so that one or more actual land transactions are disregarded?
• Which transaction or transactions were disregarded?
• Was SDLT paid on any disregarded transaction?
• What is the notional transaction between V and P that section 75A requires to be recognised?
• How much SDLT is due on that notional transaction?
• How much SDLT has already been paid and can therefore be treated as paid towards that notional liability?
• Is there a further amount now due?

This is not really a question about whether the earlier SDLT was correctly paid at the time. It is a question about how that payment is treated once section 75A changes the tax analysis.

The source also indicates that a return is required for the notional transaction. So the compliance position does not stop with recalculating the tax. The notional transaction has to be dealt with as a chargeable transaction for SDLT purposes.

Example

Illustration: a property is transferred through a series of arrangements. SDLT is paid on one of the intermediate land transactions. HMRC later takes the view that section 75A applies, so that intermediate transaction is disregarded and a notional transaction between V and P is treated as the relevant chargeable transaction instead.

If the SDLT on the intermediate transaction was lower than the SDLT due on the notional transaction, the amount already paid is treated as a payment on account of the notional transaction. The taxpayer must then pay the additional SDLT needed to bring the total up to the amount due on the notional transaction.

Why this can be difficult in practice

The short manual text assumes that the difficult issue, in most cases, is not this crediting rule itself but the earlier question of whether section 75A applies at all, and if so what the notional transaction is. Those points can be highly fact-sensitive.

Once section 75A applies, this page gives a relatively direct answer on treatment of prior SDLT payments. Even so, practical difficulties can still arise in identifying exactly which earlier transaction has been disregarded, what amount was paid in respect of it, and how that payment should be matched against the notional transaction liability.

The manual page is also brief. It does not set out wider procedural detail on amendments, assessments, or repayment mechanics. Its main point is narrower: earlier SDLT paid on a disregarded transaction counts towards the section 75A notional charge, but any extra tax due must still be paid.

Key takeaways

• If a land transaction is disregarded under section 75A, SDLT already paid on it is treated as paid towards the section 75A notional transaction.
• The relevant notional transaction is the one between V and P for which a return is required.
• If the notional transaction carries a higher SDLT charge, the balance must be paid.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guidance on SDLT for Disregarded Land Transactions Under Section 75C

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