Read the original guidance here:
HMRC SDLT: Understanding Linked Transactions for Stamp Duty Land Tax Compliance and Reporting

Linked Transactions – SDLTM30100

Understanding Linked Transactions

Linked transactions are those that are part of a larger scheme, arrangement, or series of interrelated transactions involving the same seller and buyer, or people connected to them. The Corporation Tax Act 2010, Section 1122 explains the criteria for determining whether parties are connected.

Examples of Linked Transactions

For instance, if a seller advertises a house along with its gardens for sale, and the husband purchases the house while the wife buys the gardens, these transactions are considered linked. In this case, the total tax rate will be based on the combined value of the house and the gardens.

Determining Whether Transactions are Linked

Whether transactions are linked or not depends on the specifics of each case. A buyer should carefully examine the details surrounding the transactions before completing their land transaction return. Just because a seller and buyer are involved in two separate transactions does not automatically link them. Transactions are linked if they are part of the same overall agreement.

Property Exchanges

When two properties are exchanged between two parties, let’s say Person A and Person B, the purchase of property by Person A and the purchase of property by Person B are not considered linked transactions, even if A and B are connected in some way. This rule applies unless all transactions took place before 19 July 2007.

Separate Documentation Does Not Matter

How the transactions are documented does not determine if they are linked. For example, if the transactions are laid out in separate contracts, they can still be seen as linked if they are part of a broader arrangement indicating they belong to a single deal.

Series of Transactions

A series of transactions means more than just one transaction following another. There must be a clear connection between the transactions for them to be considered linked. It is important to determine if any earlier transaction influenced the terms of any subsequent transaction.

Example of Successive Transactions

Consider a situation where a buyer is granted an option to purchase a property and then decides to exercise that option. In such cases, additional tax may be required for the first transaction. This additional tax is payable at the same time as the tax on the second transaction, as stated in FA03/S81A.

Reporting Linked Transactions

If linked transactions occur on the same effective date, the buyer has the option to report them as a single notifiable transaction. This can be done using one land transaction return, but it is at the discretion of the purchaser.

Treating Transactions as a Single Transaction

When a buyer chooses to report linked transactions this way, the combined transactions will be treated as one transaction. If multiple buyers are involved, they will be considered joint purchasers for the purposes of reporting.

Important Considerations

• Always evaluate the overall agreement to understand if the transactions are linked.
• Documentation should reflect the true nature of the transactions rather than changing their link status.
• Be aware of how previous transactions could impact the tax obligations of future transactions, especially with options to purchase.
• The decision to report linked transactions as a single transaction can simplify the tax reporting process.

Conclusion

For any transactions that you are considering, be meticulous in your examination of the connections between them. Ensure that you report your transactions accurately to avoid potential tax complications.