SDLT Exchange Rules: Notional Transactions and Consideration in Land Exchanges

How SDLT Exchange Rules Apply to a Section 75C(7) Notional Transaction

Where section 75C creates a notional land transaction between V and P, the normal SDLT rules on exchanges can still apply. This means you should not assume the consideration is only cash. If land, buildings or another property interest is given as all or part of the consideration, the exchange rules may affect how the SDLT chargeable consideration is worked out.

• Section 75C can require SDLT to be analysed by reference to a deemed transaction between V and P.
• The usual SDLT exchange rules are not disapplied just because the transaction is notional rather than actual.
• If one party gives land or a building in return for another property, that may count as an exchange for SDLT purposes.
• You should look at the whole arrangement, including linked steps, and not just the wording of one contract.
• The key question is what V is treated as giving and what P is treated as giving in return under the section 75C analysis.
• In practice, mixed consideration such as cash plus land can make the SDLT analysis more complex and may require the general exchange rules to be applied.

Scroll down for the full analysis.

SDLT and exchanges under section 75C(7): how the exchange rules apply to the notional transaction between V and P

This page explains a narrow but important SDLT point. Where section 75C applies and creates a notional land transaction between V and P, the ordinary SDLT rules on exchanges can also apply to that notional transaction. This matters because the chargeable consideration may not be just money. Land, buildings, or other reciprocal land transfers may form part of the consideration, and that can affect how SDLT is calculated.

What this rule is about

Section 75C is part of the SDLT rules dealing with certain arrangements involving alternative property finance. In some cases, it requires SDLT to be analysed by reference to a notional transaction between two parties identified as V and P.

The specific point on this page is that, when working out that notional transaction, you do not ignore the general SDLT rules on exchanges. If the arrangement is, in substance, one where land transactions are given in consideration for each other, the exchange rules may apply to the deemed transaction just as they would to an ordinary land exchange.

So the issue is not whether the transaction is “real” or “notional”. The issue is whether, viewed through the section 75C framework, there is an exchange-type arrangement between V and P.

What the official source says

HMRC’s manual states that the SDLT rules for exchanges apply to the notional transaction between V and P. It gives the example of two parties entering into two or more land transactions in consideration for each other. One party may accept land or a building as all or part of the consideration for disposing of another property.

The manual cross-refers to HMRC’s general guidance on exchanges. That indicates that the normal exchange principles are intended to be brought into the section 75C analysis, rather than replaced by a special rule unique to section 75C(7).

What this means in practice

In practice, you should not assume that consideration is only cash simply because section 75C creates a deemed or notional transaction. If V and P are treated as entering into a transaction and, looking at the overall arrangement, land is being given for land, or land is part of the bargain, the exchange rules may affect the SDLT position.

This matters because SDLT on exchanges is not worked out in the same way as a straightforward purchase for cash. Where land is given as consideration, you need to consider the exchange rules to determine the chargeable consideration for the notional transaction.

For conveyancers and advisers, the practical consequence is that the analysis must go beyond the formal wording of the contracts. You need to identify what each side is actually giving and receiving in the arrangement that section 75C asks you to test.

How to analyse it

A sensible way to approach this point is:

• First, identify whether section 75C applies at all and whether it creates a notional transaction between V and P.
• Then ask what V is treated as transferring and what P is treated as giving in return.
• Check whether the consideration includes another land transaction, or whether two or more land transactions are being entered into in consideration for each other.
• If so, consider the general SDLT exchange rules, rather than treating the transaction as a simple cash purchase.
• Review the whole arrangement, not just one document in isolation, because reciprocal land transfers may be spread across connected steps.

The key question is whether, for SDLT purposes, the notional transaction between V and P has the characteristics of an exchange.

Example

Illustration: suppose an arrangement falls within section 75C so that a notional land transaction is treated as taking place between V and P. As part of the overall deal, P does not simply pay money. Instead, P gives V an interest in another property as part of what V receives. In that case, the exchange rules may apply to the notional transaction between V and P, because land is being given as all or part of the consideration.

The point of the example is not the detailed tax result, which depends on the wider exchange rules, but the method: once land forms part of the consideration, the exchange analysis must be considered.

Why this can be difficult in practice

This can be difficult because section 75C already requires a deemed-transaction analysis, and exchanges often involve multiple steps or reciprocal transfers that are not obvious if each document is read separately.

There may also be uncertainty about exactly what counts as the consideration for the notional transaction between V and P. In some arrangements, part of the value moves in cash and part through land or buildings. In others, the reciprocal nature of the deal is embedded in linked transactions rather than stated expressly.

The HMRC manual page is brief and does not set out the full mechanics. So, in practice, this point usually has to be read together with the general SDLT rules on exchanges and the wider section 75C framework.

Key takeaways

• The normal SDLT exchange rules can apply even where section 75C creates only a notional transaction between V and P.
• If land or buildings are given as all or part of the consideration, do not analyse the transaction as a simple cash purchase without checking the exchange rules.
• The correct approach is to examine the overall arrangement and identify what each party is giving and receiving for SDLT purposes.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: SDLT Exchange Rules: Notional Transactions and Consideration in Land Exchanges

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