Understanding Section 75A: Notional Land Transactions and Stamp Duty Implications

SDLT section 75A: comparing actual transactions with the notional land transaction

Section 75A can apply where a series of connected steps produces less SDLT than a simple direct transfer of the same property interest from the original owner to the end purchaser. The key test is whether the SDLT on the real arrangement is lower than the SDLT that would have been due on a deemed direct transfer from V to P of the chargeable interest disposed of by V.

• The comparison is between the SDLT on the actual scheme transactions and the SDLT on a single notional land transaction from V to P.
• The notional transaction must be the direct transfer of the same chargeable interest that V disposed of, not a different or derivative interest.
• To apply the test properly, identify V, identify P, work out the SDLT on the actual steps, then calculate the SDLT on the deemed direct transfer and compare the two figures.
• Reliefs must be considered by reference to the notional direct acquisition by P from V, so a relief on an intermediate step may not apply to the notional transaction.
• Section 75A does not apply on this test alone if the lower SDLT arises only because of certain alternative property finance rules or Schedule 9 provisions such as Right to Buy or shared ownership.
• If one of those specified provisions is used together with another relief, section 75A may still need to be considered, and meeting this test is only one part of the wider rule.

Scroll down for the full analysis.

SDLT section 75A: the comparison with the notional land transaction

This page explains one of the key conditions for the SDLT anti-avoidance rule in section 75A. The condition asks a simple but important question: is the SDLT payable on the real steps in the arrangement lower than the SDLT that would have been payable if the seller had simply transferred the property directly to the end purchaser? If the answer is yes, section 75A may apply, subject to the rest of the rule.

What this rule is about

Section 75A is aimed at arrangements involving a number of connected steps, where those steps produce less SDLT than a more direct transaction would have done. The legislation does this by comparing the actual transactions with a hypothetical substitute transaction, often called the notional land transaction.

The part dealt with here is the third condition in section 75A(1)(c). It is sometimes called the comparison test. It does not ask whether any single step is artificial. It asks whether, taking the arrangement as a whole, the SDLT on the actual scheme transactions is less than the SDLT that would have been due on a deemed direct transfer from V to P.

In HMRC’s section 75A framework, V is the original owner who disposes of the chargeable interest, and P is the person who ends up acquiring it for these purposes.

What the official source says

HMRC says that the third condition is met where the SDLT payable on the actual scheme transactions is less than the SDLT that would be payable on a notional land transaction consisting of:

• V disposing of a chargeable interest, and
• P acquiring that same chargeable interest.

This matters because, when section 75A is applied, land transactions within the scheme are disregarded and replaced by that single notional land transaction.

The source also makes an important interpretive point. The comparison must be made by looking at P’s notional acquisition of the chargeable interest that V disposed of. It is not enough to look at some other interest that derives from it. That distinction can affect whether any relief would be available on the notional transaction.

HMRC also states that section 75A does not apply if this comparison condition is satisfied only because of certain specified reliefs or provisions. The source lists:

• section 71A, alternative property finance
• section 72 and section 72A, alternative property finance in Scotland, now repealed for transactions with an effective date on or after 1 April 2015
• section 73, alternative property finance
• a provision of Schedule 9, covering Right to Buy and shared ownership

However, HMRC also says section 75A can still apply where one of those provisions is combined with another relief.

What this means in practice

In practice, this condition is a tax comparison exercise.

You first identify the actual scheme transactions and the SDLT payable on them. Some of those steps may be land transactions and some may not. Then you compare that total with the SDLT that would be payable if, instead, there had been one direct notional land transaction in which V transferred the relevant chargeable interest straight to P.

If the actual SDLT is lower, this condition points towards section 75A applying.

The source makes clear that the notional transaction is not just any broad economic equivalent. It is specifically a notional acquisition by P of the chargeable interest that V disposed of. That can matter where the real arrangement involves intermediate rights, derivative interests, or restructuring steps. For the comparison, the focus is on the property interest that started with V and is treated as moving to P.

This can also affect relief analysis. A relief that might have applied to one of the actual steps does not automatically apply to the notional transaction. The question is whether relief would apply to the deemed direct acquisition by P from V of V’s chargeable interest.

The carve-out for certain alternative property finance and shared ownership or Right to Buy provisions is also important. If the only reason the comparison produces a lower SDLT figure is the operation of one of those specified provisions, HMRC says section 75A does not apply on that basis alone. But if that provision is used alongside another relief, section 75A may still need to be considered.

How to analyse it

A sensible way to approach this condition is:

• Identify V and P. Who is treated as disposing of the chargeable interest, and who is the end acquirer for section 75A purposes?
• Identify the chargeable interest disposed of by V. Be precise about the legal interest, not just the commercial outcome.
• List the actual scheme transactions and work out the SDLT payable on them.
• Construct the notional land transaction: a direct disposal by V and acquisition by P of that same chargeable interest.
• Calculate the SDLT that would be payable on that notional transaction.
• Compare the two figures. Is the SDLT on the actual scheme transactions lower?
• If yes, ask whether that result arises only because of one of the specified provisions on alternative property finance, Right to Buy, or shared ownership.
• If one of those provisions is involved with another relief, do not assume section 75A is switched off. The source says it can still apply.

A key discipline is to avoid comparing the actual arrangement with the wrong hypothetical transaction. The legislation and HMRC’s explanation require the notional acquisition of V’s chargeable interest by P, not a looser or commercially similar substitute.

Example

This is an illustration of the comparison exercise.

Suppose V owns a freehold. A series of steps is entered into so that P ends up with the property, but the SDLT on the actual steps is lower than it would have been on a straightforward sale by V to P. To test section 75A(1)(c), you do not compare the actual steps with whatever final structure P ends up holding if that structure is legally different. Instead, you ask what SDLT would have been payable if V had directly transferred the freehold interest that V disposed of to P.

If the SDLT on the actual steps is less than the SDLT on that deemed direct transfer, the third condition is met, unless the only reason for the lower amount is one of the specified alternative property finance or Schedule 9 provisions.

Why this can be difficult in practice

The main difficulty is identifying the correct notional transaction. In multi-step arrangements, especially those involving intermediate entities, derivative interests, or reliefs, it is easy to compare the actual SDLT with the wrong hypothetical transfer.

Another difficulty is reliefs. The source indicates that relief must be considered by reference to P’s notional acquisition of V’s chargeable interest. That may not match the relief position on the actual steps. A relief available on an intermediate transaction does not necessarily carry over to the notional direct transfer.

The carve-out for alternative property finance and Schedule 9 provisions also needs care. The source says section 75A does not apply where the comparison condition is met only because of those provisions. But if one of them is combined with another relief, section 75A can still apply. That means the reason why the SDLT is lower matters, not just the fact that it is lower.

Finally, this page deals only with one condition in section 75A. Even if this comparison test is met, the rest of section 75A still has to be considered.

Key takeaways

• The comparison is between the SDLT on the actual scheme transactions and the SDLT on a deemed direct transfer from V to P.
• The notional transaction must involve P acquiring the chargeable interest that V disposed of, not merely a derivative or economically similar interest.
• If the lower SDLT result arises only because of certain alternative property finance or Schedule 9 provisions, section 75A does not apply on that basis alone, though it may still apply if another relief is also involved.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Understanding Section 75A: Notional Land Transactions and Stamp Duty Implications

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