When SDLT can ignore an incidental payment
Section 75B in brief
Where SDLT anti-avoidance rules apply, payments for steps that are merely incidental to a land transfer may be excluded from the made-up transaction.
- The payment, not the step itself, is ignored.
- Building work, goods and finance may qualify in the right facts.
- A fair split may be needed for a partly incidental payment.
Scroll down for the full analysis.
Read the original guidance here:
When SDLT can ignore an incidental payment
Some property arrangements include payments for building work, goods or finance, and where SDLT anti-avoidance rules create a made-up land deal for tax, they may leave out a payment for something merely incidental. That can change the amount used to work out stamp duty.
What this rule is about
Section 75B sits within an anti-avoidance rule that applies where arrangements involve several connected steps, including steps between the original seller, other parties and the final buyer. It can create a made-up land transaction.
The aim is not to tax every payment without thought. An incidental payment may be excluded.
What the official source says
HMRC tells readers, in its manual, to ignore only the payment. The incidental step can still be one of the wider scheme transactions. The legislation sets limits on what can count as incidental.
- The step must be merely incidental to the transfer of the land interest.
- A step is not incidental if it forms part of the process that effects the transfer.
- It is not incidental if the transfer depends on that step being completed.
- Building work on the land may be incidental in the right case.
- A sale or supply of something other than land may be incidental.
- Finance for the wider arrangement may also be incidental.
- If only part is incidental, the payment can be split on a just and reasonable basis.
What this means in practice
Calling a contract separate does not settle the point, because the real question is what that contract does within the arrangement and whether it helps bring about the land transfer. Labels do not decide it.
This distinction can matter a great deal. A payment may be left out of the made-up transaction, while the contract behind it remains part of the wider scheme.
- List every contract, payment and promise connected with the deal.
- Separate the land price from payments for other things.
- Check whether completion of one step was needed before the land could transfer.
- Keep records showing why a payment was made.
How to analyse it
Start with the wider arrangement rather than one document in isolation, because section 75A must apply first before section 75B can decide whether a payment can be left out. Begin with section 75A.
- Identify the original seller, the final buyer and the land interest transferred.
- Set out all connected steps in date order.
- Work out the largest relevant amount paid or received across those steps.
- Ask whether the separate step helped effect the land transfer.
- Check whether the transfer was conditional on that step.
- If the answer is mixed, split the payment fairly between the parts.
Example
Ravi pays £520,000 for land and enters a related £80,000 building contract. Assume the work supports construction, not transfer. If the facts show that contract is merely incidental, the £80,000 is left out. The amount used for the made-up transaction is then £520,000, not £600,000. The building contract may still be part of the wider scheme.
Why this can be difficult in practice
The hard part is often drawing the line, because building work and finance may be incidental in the right case but do not become automatic exceptions merely because they fall into those categories. The facts matter.
You might think a payment outside the sale contract cannot affect stamp duty. It can. The wider arrangement, including steps after the land transfer, may matter.
- A separate invoice does not prove that a step was incidental.
- A building contract may fail the test if it helps bring about the transfer.
- A payment may need to be split where it covers both incidental and non-incidental work.
- HMRC’s manual explains its view, but the legislation is the law.
Key takeaways
- Section 75B can exclude payments for steps that are merely incidental.
- It does not remove the incidental step from the wider arrangement.
- The documents and the real sequence of events decide the answer.
Technical analysis
For advisers, and for anyone who wants to check the law behind this page. You do not need this section to understand the guidance above.
Legislation
- FA 2003 section 75A — when the anti-avoidance rule applies to linked steps; the made-up land transaction and its payment amount
- FA 2003 section 75B — ignoring payments for merely incidental transactions
Official guidance
The pages below are HMRC’s guidance. Guidance is not law. It sets out how HMRC reads the legislation, and it is not binding on you, on a tribunal or on a court. Where guidance and the legislation differ, the legislation wins. HMRC can also change or withdraw guidance, and it may not cover your facts.
Where this is not settled
- Whether something is merely incidental depends on the real facts, documents and links between the steps.
- The supplied statutory text is current only to 17 November 2025. Current-law verification is needed for a later transaction.
Evidence you would need
This kind of case is decided on the facts of the individual property. These are the records that usually settle it, and the ones an adviser would ask you for.
- Contracts, invoices and payment records for each part of the arrangement.
- A timeline showing how the land transfer and other steps were connected.
- Evidence of what each payment bought and whether the transfer depended on it.
Explore this with an AI
Readers often want to test their own situation. Copy the prompt below into ChatGPT, Claude or Gemini. It hands the model the actual legislation for this page rather than letting it answer from memory, and tells it to be explicit about what is uncertain. What comes back is information, not advice – check it against the links above.
I am researching UK Stamp Duty Land Tax (SDLT), which applies in England and Northern Ireland. MY QUESTION When SDLT can ignore an incidental payment [Replace this with your own situation: what you are buying, the price, the dates, who the buyer is, and what you plan to do with the property.] THE LAW THIS TURNS ON - FA 2003 section 75A - when the anti-avoidance rule applies to linked steps https://www.legislation.gov.uk/ukpga/2003/14/section/75A/2025-11-17 - FA 2003 section 75A - the made-up land transaction and its payment amount https://www.legislation.gov.uk/ukpga/2003/14/section/75A/2025-11-17 - FA 2003 section 75B - ignoring payments for merely incidental transactions https://www.legislation.gov.uk/ukpga/2003/14/section/75B/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09240 HOW I WANT YOU TO ANSWER 1. Work from the legislation above. Read it before answering. Guidance from HMRC is its view of the law, not the law, and does not bind a tribunal or a court. 2. Tell me what the rule actually requires, in plain English. 3. Tell me which facts decide the answer, and which facts would change it. 4. Tell me what evidence I would need to support the position. 5. Be explicit about anything unsettled or fact-sensitive. Do not guess. 6. Your training data has a cutoff and SDLT rates and reliefs change at fiscal events. Say so if you are not sure the law is current. POINTS ALREADY KNOWN TO BE UNCERTAIN ON THIS TOPIC - Whether something is merely incidental depends on the real facts, documents and links between the steps. - The supplied statutory text is current only to 17 November 2025. Current-law verification is needed for a later transaction. Do not give me a conclusion you cannot support from the provisions above.
Legislation links show Finance Act 2003 as it stood on 2025-11-17. The law may have changed since, and the rules that apply are those in force on the date of your transaction. The official guidance this page is based on is here.
This page was last updated on 31 August 2026
Useful article? You may find it helpful to read the original guidance here: When SDLT can ignore an incidental payment
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