Guidance on Incidental Transactions and Chargeable Consideration for Notional Land Transactions

SDLT section 75B: ignoring consideration for incidental transactions

Under SDLT section 75B, HMRC may treat a series of steps as a notional land transaction between the original owner and the final purchaser. When working out the chargeable consideration for that notional transaction, payments for transactions that are merely incidental to transferring the land can be left out, but deciding what is truly incidental depends on the facts.

• Section 75B can apply where land passes through a scheme or series of transactions, so SDLT is assessed on a deemed transaction between the original vendor and the eventual purchaser.
• Not every payment in the wider arrangements is counted; consideration for a transaction is excluded if that transaction is incidental to the transfer of the chargeable interest, or an interest derived from it.
• If a transaction is incidental, only its consideration is ignored for the SDLT calculation; the transaction itself may still form part of the overall scheme analysis.
• Where a transaction is only partly incidental, the consideration can be split on a just and reasonable basis, with only the incidental part left out.
• In practice, the key question is whether the transaction is merely ancillary to the transfer or whether it forms part of the real commercial price for the land.

Scroll down for the full analysis.

SDLT section 75B: when consideration for an incidental transaction is ignored

This page explains a narrow but important point in the SDLT anti-avoidance rules. Where section 75B applies, SDLT is charged on a notional land transaction between the original owner and the eventual purchaser. In working out the chargeable consideration for that notional transaction, some amounts are left out if they relate to a transaction that is only incidental to the transfer of the land. The difficulty is deciding what is truly incidental, and what is really part of the price for getting the land to the purchaser.

What this rule is about

Section 75B deals with certain arrangements involving more than one transaction, where land ends up passing from one person to another through a scheme or series of transactions. Instead of looking only at the individual steps, the legislation can impose SDLT by treating there as being a notional land transaction between:

• V, the original vendor, and
• P, the person who ultimately obtains the chargeable interest or an interest deriving from it.

To calculate SDLT on that notional transaction, you need to identify the chargeable consideration. The rule on this page says that not every payment or item of consideration within the wider arrangements is automatically counted. If a particular transaction is merely incidental to the transfer of the chargeable interest from V to P, the consideration for that transaction is excluded when calculating the notional consideration.

What the official source says

The HMRC manual says that, for the purposes of calculating the chargeable consideration for the notional land transaction between V and P, consideration for a particular transaction is excluded if that transaction is incidental to the transfer of:

• the chargeable interest itself, or
• an interest deriving from it,

from V to P.

The manual also makes two further points:

• If a transaction is incidental, only its consideration is ignored. The transaction itself can still be a scheme transaction within the section 75B analysis.
• If a transaction is only partly incidental, the consideration can be apportioned on a just and reasonable basis. The part that relates to the merely incidental element is then ignored in calculating the chargeable consideration for the notional land transaction.

What this means in practice

The practical question is not simply whether a transaction happened as part of the overall arrangements. The question is whether that transaction was incidental to getting the land, or an interest derived from it, from the original owner to the eventual purchaser.

If it was, the payment for that transaction does not increase the deemed price of the notional land transaction for section 75B purposes.

That matters because section 75B is aimed at identifying the real economic consideration for the land transfer. The rule prevents the notional consideration from being overstated by including amounts paid for side arrangements that are only incidental to the transfer.

But the manual is careful not to say that an incidental transaction drops out of the analysis altogether. It may still form part of the overall scheme. The point is narrower: its consideration is ignored when computing the chargeable consideration for the notional transaction.

How to analyse it

A sensible way to approach this point is to ask the following questions.

• What is the chargeable interest that ultimately moves from V to P, or what interest derives from it?
• What are the separate transactions within the arrangements?
• For each transaction, what consideration is given?
• Is that transaction part of the substantive transfer of value for the land, or is it merely incidental to getting the land from V to P?
• If the transaction has mixed elements, can the consideration be split on a just and reasonable basis?

The phrase “incidental” is doing the key work. The source material does not provide a detailed statutory test on this page. So the analysis is likely to depend on the role the transaction plays in the arrangements as a whole. A transaction that is only ancillary or subordinate to the transfer may be incidental. A transaction that forms part of the real bargain for the land is less likely to be.

If only part of the transaction is incidental, the source says that apportionment is possible. That apportionment must be just and reasonable. In practice, that means the split should reflect the real substance of what is being paid for, rather than being arbitrary.

Example

Illustration: a series of transactions results in a property interest moving from V to P, and section 75B applies so that a notional transaction between V and P must be considered. One transaction within the arrangements is partly concerned with administrative or ancillary steps that are merely incidental to the transfer, but it also includes a substantive element that is part of the overall value passing for the land.

In that situation, the whole amount paid under that transaction is not automatically included or excluded. Instead, the consideration may be apportioned on a just and reasonable basis. The part attributable to the merely incidental element is ignored for the section 75B calculation. The remainder may still count.

Why this can be difficult in practice

The source material states the rule briefly, but applying it can be fact-sensitive.

First, “incidental” is a conclusion, not a mechanical label. A transaction may be connected with the transfer without being incidental to it. The closer a payment is to the commercial bargain for the land, the harder it is to treat it as incidental.

Second, the manual makes clear that an incidental transaction can still be a scheme transaction. That can be counterintuitive. A taxpayer might assume that if a transaction is incidental, it is irrelevant altogether. That is not what the source says. It may still matter for identifying the scheme, even though its consideration is ignored in the notional consideration calculation.

Third, where a transaction is only partly incidental, the need for a just and reasonable apportionment introduces judgement. The source does not prescribe a formula. The quality of the factual evidence and the commercial documentation may therefore matter a great deal.

Key takeaways

• Under HMRC’s explanation of section 75B, consideration for a transaction is excluded from the notional SDLT calculation if that transaction is incidental to the transfer of the chargeable interest, or an interest deriving from it, from V to P.
• An incidental transaction may still be part of the scheme. What is ignored is the consideration for that transaction, not necessarily the transaction itself.
• If a transaction is only partly incidental, the consideration can be apportioned on a just and reasonable basis, and only the incidental part is left out.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guidance on Incidental Transactions and Chargeable Consideration for Notional Land Transactions

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