Guide to Calculating SDLT for Notional and Scheme Land Transactions

When the Section 75A SDLT Comparison Test Is Met

Section 75A is an anti-avoidance rule for Stamp Duty Land Tax. The comparison test in section 75A(1)(c) asks whether the SDLT on a single notional land transaction between the original seller and the person who ends up with the property would be higher than the total SDLT otherwise due on the actual scheme transactions that are land transactions. If the notional SDLT is higher, this condition is met; if the actual total is the same or higher, it is not.

• You compare two figures: the SDLT on the notional transaction and the total SDLT due on the actual scheme transactions that count as land transactions.
• The test is met only if the SDLT on the notional transaction is greater than the total SDLT on the actual land transactions.
• If the actual land transactions produce the same SDLT as, or more SDLT than, the notional transaction, section 75A(1)(c) is not satisfied.
• Only scheme steps that are land transactions are included in the comparison, so identifying which steps qualify is important.
• This is only one part of the wider section 75A test, so meeting it alone does not mean section 75A applies overall.

Scroll down for the full analysis.

When the Section 75A comparison test is met

This page explains the comparison test in section 75A(1)(c) of the SDLT rules. In simple terms, this test asks whether the SDLT that would be due on a single notional land transaction is more than the total SDLT due on the actual land transactions carried out as part of the arrangement. If it is, one of the conditions for section 75A is satisfied.

What this rule is about

Section 75A is an anti-avoidance rule for Stamp Duty Land Tax. It can apply where a person disposes of land, another person ends up with the land, and the steps used in between reduce the SDLT that would otherwise have arisen.

The part dealt with here is the comparison exercise in section 75A(1)(c). This is not the whole test. It is one condition within the wider section 75A framework. The question at this stage is whether the tax result of the actual transactions is lower than the tax result of a notional transaction constructed under section 75A.

What the official source says

The official material says that, once you have worked out the consideration for the notional land transaction between V and P, you calculate the SDLT that would be payable on that amount.

You then compare that figure with the total SDLT that would otherwise be due on all of the scheme transactions that are themselves land transactions.

If the SDLT on the notional land transaction is greater than that total, the third condition in section 75A is met.

If the SDLT on the actual scheme transactions is equal to, or more than, the SDLT on the notional land transaction, this condition is not met. In that case, the official source says there will not be a notional land transaction under section 75A.

What this means in practice

This is a tax comparison test. It is aimed at identifying whether the structure used has produced a lower SDLT outcome than a direct transaction would have produced.

The practical effect is that section 75A is only capable of applying if the notional transaction gives a higher SDLT charge than the real land transactions in the arrangement.

That means two calculations matter:

• the SDLT on the notional transaction between V and P, and
• the total SDLT otherwise due on the actual scheme transactions that are land transactions.

This second figure is narrower than “all steps in the arrangement”. The source refers specifically to scheme transactions which are land transactions. So, in applying the comparison, you need to identify which steps count as land transactions for SDLT purposes.

If the actual land transactions already produce the same SDLT as, or more SDLT than, the notional transaction, section 75A does not create a further notional charge on this basis.

How to analyse it

A sensible way to approach this comparison is:

1. Identify V and P. These are the persons used in the section 75A analysis: broadly, the original vendor and the person who ends up with the property.
2. Work out the consideration for the notional land transaction between V and P. That is done under the earlier section 75A rules and is assumed to have already been established before this comparison starts.
3. Calculate the SDLT on that notional transaction.
4. List the actual scheme transactions that are land transactions.
5. Calculate the SDLT otherwise due on each of those actual land transactions.
6. Add those SDLT amounts together.
7. Compare the two totals.

The key question is simple: is the SDLT on the notional transaction higher than the total SDLT on the actual land transactions?

If yes, the section 75A(1)(c) condition is met.

If no, that condition is not met.

Example

This is only an illustration of the comparison mechanics.

Assume the notional transaction between V and P would produce SDLT of £50,000.

The actual arrangement involves two scheme transactions that are land transactions. The SDLT otherwise due on those two transactions is £15,000 and £20,000, making £35,000 in total.

Because £50,000 is greater than £35,000, the comparison test in section 75A(1)(c) is met.

If instead the two actual land transactions produced SDLT of £25,000 and £30,000, making £55,000 in total, the condition would not be met, because the actual total is equal to or more than the notional amount.

Why this can be difficult in practice

The comparison sounds straightforward, but a number of earlier judgments affect it.

First, the notional consideration must already have been calculated correctly. If that figure is wrong, the comparison result will also be wrong.

Second, not every step in an arrangement is necessarily a land transaction. The source directs attention to scheme transactions which are land transactions, so classification matters.

Third, the source speaks of SDLT “otherwise due” on the actual scheme transactions. In practice, that requires care about what tax would in fact arise on those transactions under the normal SDLT rules.

Finally, this comparison is only one condition within section 75A. Meeting it does not by itself prove that section 75A applies overall. Failing it, however, means this part of the section 75A test is not satisfied.

Key takeaways

• The comparison is between SDLT on a notional transaction and total SDLT on the actual scheme transactions that are land transactions.
• The section 75A(1)(c) condition is met only if the notional SDLT is greater.
• If the actual total is equal to or higher than the notional SDLT, this condition is not met and section 75A does not produce a notional transaction on this basis.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guide to Calculating SDLT for Notional and Scheme Land Transactions

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