HMRC SDLT: SDLTM09320 – Consideration for certain transactions: Section 75C (4)

Principles and Concepts of Section 75C (4)

This section of the HMRC internal manual provides guidance on the consideration for certain transactions under Section 75C (4). It outlines the principles and concepts involved in the assessment and application of this provision.

• Explains the legal framework governing specific transactions.
• Details the criteria for determining transaction consideration.
• Provides examples to illustrate the application of Section 75C (4).
• Clarifies the roles and responsibilities of involved parties.

Guidance on Chargeable Consideration for Certain Transactions

This page was introduced on 15 January 2020

Understanding Chargeable Consideration

When determining how much chargeable consideration there is for a notional transaction, it’s important to know that certain payments need to be ignored. If you are involved in a transaction that falls under specific sections or schedules of the law, you do not include those amounts when calculating the chargeable consideration.

Sections and Schedules to Disregard

The following sections and schedules outline situations where amounts paid do not count as chargeable consideration:

• Section 60 – Compulsory purchase facilitating development
  • See more at SDLTM22000
• Section 61 – Compliance with planning obligations
  • See more at SDLTM22500
• Section 63 – Demutualisation of insurance company
  • See more at SDLTM23500
• Section 64 – Demutualisation of building society
  • See more at SDLTM24000
• Section 65 – Incorporation of limited liability partnership
  • See more at SDLTM24500
• Section 66 – Transfers involving public bodies
  • See more at SDLTM25000
• Section 67 – Transfer in consequence of reorganisation of parliamentary constituencies
  • See more at SDLTM25500
• Section 69 – Acquisition by bodies established for national purposes
  • See more at SDLTM26500
• Section 71 – Certain acquisitions by registered social landlords
  • See more at SDLTM27500
• Section 74 – Exercise of collective rights by tenants of flats
  • See more at SDLTM28500
• Section 75 – Crofting community right to buy
  • See more at SDLTM29000
• Schedule 6A – Relief for certain acquisitions of residential property
  • See more at SDLTM21000
• Schedule 8 – Charities relief
  • See more at SDLTM26000

What This Means for Transactions

Even though the payments made for a transaction as stated in the sections and schedules above are excluded from the chargeable consideration, the transaction itself might still be part of a wider scheme. This means it may need further consideration under different rules or guidelines. It’s essential for both buyers and sellers to understand how these exclusions work in the context of their specific transactions.

Examples of When Consideration is Disregarded

Here are a few examples illustrating how chargeable consideration may be calculated in practical scenarios:

• Example 1: Compulsory Purchase
  • If a local authority acquires land from a property owner as part of a compulsory purchase order to build a new roadway, any payment made as part of this transaction is not included in the chargeable consideration. Reference: SDLTM22000.
• Example 2: Planning Obligations
  • When a developer pays for improvements that ensure compliance with local planning obligations, those payments are excluded from the overall chargeable consideration for the property. Reference: SDLTM22500.
• Example 3: Demutualisation Example
  • If an insurance company goes through a demutualisation process, the payments made by policyholders to acquire shares in the newly formed company do not count as chargeable consideration. Reference: SDLTM23500.

Importance of Identification of Relevant Sections

It is vital for individuals involved in property transactions to identify whether their dealings fall within any of the sections or schedules mentioned. This ensures accurate calculation of the chargeable consideration and compliance with the law. Misunderstandings or inaccuracies could lead to penalties or unpaid duties.

Other Considerations in Property Transactions

There are various factors that may need attention within property transactions, including: