HMRC SDLT: Guidance on Completing SDLT1 for Shared Ownership and Right to Buy Transactions

Guidance on Completing SDLT1 for Shared Ownership Leases

This guide provides instructions for completing the SDLT1 land transaction return for notifiable transactions related to shared ownership leases. It covers various scenarios, including market value elections and staircasing transactions. If you are unsure whether a transaction is notifiable, contact the Stamp Taxes Helpline.

  • For shared ownership leases with a market value election, enter specific codes and values in designated boxes, such as Box 2 with code L and Box 9 with code 05 if claiming disadvantaged areas relief.
  • When no market value election is made, the process involves entering initial rent, premium, and Net Present Value (NPV) details in various boxes, ensuring accurate tax calculations.
  • Staircasing transactions without a market value election are notifiable if the consideration exceeds the SDLT threshold, requiring specific entries in boxes like Box 2 with code O and Box 10 for payment amounts.
  • Market value election staircasing transactions are notifiable even if no tax is due, with instructions to enter codes and payment details in boxes such as Box 2 with code F and Box 9 with code 28.
  • For transactions where the tenant acquires freehold reversion without a market value election, notifiability depends on the final payment exceeding £40,000, with specific entries required in boxes like Box 2 with code F.
  • Completing boxes 16 to 25 is necessary for certain transactions, ensuring all relevant financial details are accurately recorded for tax purposes.

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Guidance Notes for Completing the SDLT1 Land Transaction Return

These notes help you fill out the land transaction return when you’re dealing with shared ownership leases. If you’re unsure about whether a transaction needs to be reported, you can contact the Stamp Taxes Helpline at 0300 200 3510 for assistance.

Shared Ownership Lease Transactions

When you are granting a shared ownership lease, the method of determining market value can be different based on the type of property. Here’s how to handle the specific boxes on the form during the transaction.

Grant of a Shared Ownership Lease: Market Value Election: Freehold Reversion

  • Box 2: Enter code L.
  • Box 9: Enter code 05 if you’re claiming relief for disadvantaged areas; otherwise, leave blank.
  • Box 10: Leave blank.
  • Box 14: Enter the tax amount due based on the full market value, which you’ll also note in box 24.
  • Fill in boxes 16 to 22 and box 24.
  • Box 20: Enter Nil.
  • Box 22: Enter the market value specified in the lease.
  • Box 24: Enter the tax due on that market value.

Grant of a Shared Ownership Lease: Market Value Election: Leasehold Property

  • Box 2: Enter code L.
  • Box 9: Enter code 05 if you’re claiming relief for disadvantaged areas; otherwise, leave blank.
  • Box 10: Leave blank.
  • Box 14: Enter the total amount shown in boxes 24 and 25.
  • Complete boxes 16 to 25.
  • Box 20: Enter the minimum rent as stated in the lease; if it’s a peppercorn rent, enter “0.”
  • Box 22: Enter the open market premium specified in the lease.
  • Box 23: Enter the Net Present Value (NPV) of the minimum rent found in the lease.
  • Box 24: Enter the tax due on the open market premium.
  • Box 25: Enter the tax due on the NPV of the minimum rent.

Grant of a Shared Ownership Lease: No Market Value Election

  • Box 2: Enter code L.
  • Box 9: Enter code 05 if you’re claiming relief for disadvantaged areas; otherwise, leave blank.
  • Box 10: Leave blank.
  • Box 14: Enter the total of boxes 24 and 25.
  • Complete boxes 16 to 25.
  • Box 20: Enter the initial rent stated in the lease.
  • Box 22: Enter the premium paid for the lease grant.
  • Box 23: Enter the NPV of the initial rent calculated over the full lease duration.
  • Box 24: Enter the tax due on the premium.
  • Box 25: Enter the tax due on the NPV.

Transactions Involving Staircasing

Staircasing transactions occur when a tenant buys additional shares in the property. The reporting based on whether a market value election is made affects how these transactions are processed.

Staircasing Transactions: No Market Value Election: Tenant Acquires Over 80% Share

This type of transaction is reportable only if the payment for the additional share exceeds the SDLT threshold, as it relates to earlier transactions or lease grants.

  • Box 2: Enter code O.
  • Box 9: Leave blank.
  • Box 10: Input the payment amount made for the additional share.
  • Box 13: Enter “yes.”
  • Box 14: Enter the tax due on the amount in box 10.
  • Do not fill out boxes 16 to 25.

Staircasing Transactions: Market Value Election: Acquisition of Freehold Reversion

This transaction is obligatory to report even if there is no tax payable.

  • Box 2: Enter code F.
  • Box 9: Enter code 28.
  • Box 10: Enter the amount of the final payment.
  • Box 14: Enter “0.”

Staircasing Transactions: Market Value Election: Tenant Receives New Lease

This transaction is also reportable even if no tax is due.

  • Box 2: Enter code L.
  • Box 9: Enter code 28.
  • Box 14: Enter “0.”
  • Complete boxes 16 to 25.
  • Box 22: Enter the final payment amount.
  • Box 23: Enter “0.”
  • Box 24: Enter “0.”
  • Box 25: Enter “0.”

Staircasing Transactions: No Market Value Election: Tenant Acquires Freehold Reversion

If the final payment is over £40,000, this transaction is reportable, even when no tax is applicable. This is treated as separate from previous leases or staircasing transactions.

  • Box 2: Enter code F.
  • Box 9: Leave blank.
  • Box 10: Input the final payment amount.
  • Box 13: Enter “no.”
  • Box 14: Enter the tax due on the amount in box 10.

Staircasing Transactions: No Market Value Election: Tenant Receives New Lease

  • Box 2: Enter code L.
  • Box 9: Leave blank.
  • Box 13: Enter “no.”
  • Box 14: Enter the sum of amounts in boxes 22 and 23.
  • Complete boxes 16 to 25.
  • Box 22: Enter the final payment amount.
  • Box 23: Input the NPV of the rent for the new lease.
  • Box 24: Enter the tax due on the amount in box 22.
  • Box 25: Enter the tax due on the NPV entered in box 23.

Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: Guidance on Completing SDLT1 for Shared Ownership and Right to Buy Transactions

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