When a property transaction step cannot be ignored for SDLT
In short
Section 75B stops parties ignoring payments for steps that form part of a property transfer arrangement. It matters only where the section 75A anti-avoidance rule applies.
- Look at the whole sequence of transactions.
- Check whether a step was necessary for the transfer.
- Do not rely on labels in the paperwork.
Scroll down for the full analysis.
Read the original guidance here:
When a property transaction step cannot be ignored for SDLT
You cannot leave out every extra step in a property deal when working out stamp duty. Those payments can count under section 75B.
What this rule is about
Section 75A is an SDLT anti-avoidance rule. It can apply where connected dealings, even through separate steps, produce less SDLT than a direct sale from the original seller to the final buyer.
A notional land transaction then arises. That is a made-up direct sale used to work out the SDLT result.
What the official source says
HMRC’s manual says that transactions cannot be called incidental where they form part of the process or series that makes transfer happen, the transfer depends on them, or section 75A(3) lists them as scheme transactions. Their payments count in the calculation.
- A step forms part of the process or series that makes the property transfer happen.
- The property transfer depends on completing that step.
- The step is a type of scheme transaction listed in section 75A(3).
- Those listed examples include some leases, sub-sales and rights to end a lease.
What this means in practice
Labels do not decide the issue. The question is whether it played a real part in moving the property from the original seller to the final buyer.
HMRC’s manual also explains that the transfer can include the buyer receiving an interest derived from the seller’s original interest, even when the buyer does not receive the freehold itself. A new lease may still matter.
- Map every payment and agreement in the wider arrangement.
- Check whether a step had to happen before the transfer could complete.
- Do not assume a separate document makes a step separate for SDLT.
- Keep records that explain why each payment was made.
How to analyse it
Start with section 75A. Section 75B does not create a separate tax charge. Instead, it controls which payments can be ignored when section 75A requires the notional transaction calculation.
- Identify the original seller and the final buyer.
- List every transaction connected with the sale and purchase.
- Ask whether section 75A applies to that arrangement.
- For each step, ask whether it helped effect the transfer.
- Check whether the transfer depended on that step completing.
- Check whether the step matches an example in section 75A(3).
- Include payments for steps that fail the incidental test.
Example
Ayesha gives £500,000 for a property through a series of arrangements. She gives £20,000 for an intermediate step. It must complete before she receives it. If section 75A applies, section 75A counts £20,000. Separate status does not permit exclusion. On these assumed facts, Ayesha has given £520,000 across the scheme transactions.
Why this can be difficult in practice
This is where people go wrong: an extra agreement may appear unrelated when considered alone. Alongside the other documents, it may be an essential link in the transfer.
HMRC’s manual states its view of the rule. The legislation remains the law, and the facts decide whether a transaction was merely incidental.
- A payment may serve more than one purpose.
- A transaction can occur after the buyer receives the property.
- Separate parties or separate contracts do not end the enquiry.
- The full commercial sequence matters, not just the final transfer form.
Key takeaways
- A necessary transfer step cannot count as merely incidental.
- Payments for that step may affect the SDLT calculation.
- Check the whole arrangement, not each document in isolation.
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 SDLT anti-avoidance rule can apply; examples of transactions within a property scheme; the notional direct property transaction created; how the amount for the notional transaction is set
- FA 2003 section 75B — when an incidental transaction can be ignored; transactions that cannot count as incidental; meaning of a transfer between seller and buyer
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
- The legislation does not give a full definition of ‘merely incidental’, so the answer can depend on how closely a step connects to the transfer.
- A label used in the paperwork does not settle whether a transaction forms part of the transfer process.
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, completion statements and transfer documents for every step
- A diagram showing who transferred property or rights to whom
- Evidence of payments made or received in the wider arrangement
- Terms showing whether one step had to complete before the transfer
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 a property transaction step cannot be ignored for SDLT [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 SDLT anti-avoidance rule can apply https://www.legislation.gov.uk/ukpga/2003/14/section/75A/2025-11-17 - FA 2003 section 75A - examples of transactions within a property scheme https://www.legislation.gov.uk/ukpga/2003/14/section/75A/2025-11-17 - FA 2003 section 75A - the notional direct property transaction created https://www.legislation.gov.uk/ukpga/2003/14/section/75A/2025-11-17 - FA 2003 section 75A - how the amount for the notional transaction is set https://www.legislation.gov.uk/ukpga/2003/14/section/75A/2025-11-17 - FA 2003 section 75B - when an incidental transaction can be ignored https://www.legislation.gov.uk/ukpga/2003/14/section/75B/2025-11-17 - FA 2003 section 75B - transactions that cannot count as incidental https://www.legislation.gov.uk/ukpga/2003/14/section/75B/2025-11-17 - FA 2003 section 75B - meaning of a transfer between seller and buyer 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/sdltm09250 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 - The legislation does not give a full definition of 'merely incidental', so the answer can depend on how closely a step connects to the transfer. - A label used in the paperwork does not settle whether a transaction forms part of the transfer process. 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 1 September 2026
Useful article? You may find it helpful to read the original guidance here: When a property transaction step cannot be ignored for SDLT
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