Alternative finance and the historic 17% stamp duty rule
In brief
The HMRC manual page explains a special rule for a former Scottish alternative finance arrangement. Since section 72A has been omitted, the rule no longer provides a current SDLT route.
- The page is historic guidance.
- It does not settle SDLT on a modern finance deal.
- Current law needs checking for a live transaction.
Scroll down for the full analysis.
Read the original guidance here:
Alternative finance and the historic 17% stamp duty rule
Although this HMRC page describes a special rule for an old Scottish finance arrangement, it is not a current stamp duty route for buying a home in England or Northern Ireland. That is the key point.
What this rule is about
This page concerns a finance deal in which a financial institution and another person bought land together. Legislation called that arrangement section 72A.
This rule mattered when the home interest was above the higher threshold. In broad terms, the test treated more than £500,000 of the amount paid as linked to one home.
Parliament designed the rule to stop the finance provider changing the tax result simply because it joined the purchase.
What the official source says
HMRC’s manual tells readers to ignore the finance provider when testing whether the 17% company rate applies. HMRC then tests the other party as if it bought without the provider.
- The arrangement had to fall within section 72A.
- The interest bought had to include a home above the higher threshold.
- The finance provider was left out of the company-rate test.
- The other party could bring the 17% rate into play.
- A statutory exclusion could still apply.
- HMRC gives a property rental business as one example.
This is HMRC’s account of the legislation. The legislation itself decides the result.
What this means in practice
One important catch is that section 72A was a Scottish SDLT rule. Parliament omitted it when SDLT stopped applying in Scotland. As a result, the trigger for this special rule is no longer available.
Do not read this manual page as saying that a modern alternative finance purchase in England or Northern Ireland automatically faces 17% stamp duty.
- Do not rely on the manual page alone for a live purchase.
- Check which country’s land tax applies.
- Check the date of the deal.
- Identify each person or business taking part.
- Consider the ordinary SDLT rules that apply instead.
How to analyse it
Begin with the transaction, not the label given to the finance product. A bank’s involvement alone does not decide the stamp duty answer.
- Is the land in England or Northern Ireland?
- Did the deal use the historic section 72A arrangement?
- When did the deal take place?
- What part of the price related to the home?
- Was a company or similar body buying?
- Was the property to be used only for a qualifying business purpose?
Example
Imagine that, before SDLT ended in Scotland, a bank and a company bought a £600,000 home together under the section 72A arrangement. For this test, HMRC would ignore the bank. If the company met the conditions for the 17% rate, and no statutory business exclusion applied despite the finance provider joining the purchase, that rate could apply. It cannot now trigger paragraph 6B.
Why this can be difficult in practice
Because it combines an alternative finance rule with a rate that still exists for some company purchases, the heading can mislead. They are not the same question.
- The 17% rate has its own conditions.
- A business exclusion is not automatic.
- The intended use of the property can matter.
- Older HMRC manual pages may describe rules with no current use.
- A finance agreement may use terms that do not match the statutory test.
Key takeaways
- This HMRC page describes a historic Scottish arrangement.
- The finance provider was ignored for the old company-rate test.
- Check current legislation before using this page for a live deal.
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 72A — historic Scottish shared ownership finance arrangement
- FA 2003 Schedule 4A para 1 — when a home interest exceeds the higher threshold
- FA 2003 Schedule 4A para 3 — 17% rate for certain company home purchases
- FA 2003 Schedule 4A para 5 — business exclusions from the 17% company rate
- FA 2003 Schedule 4A para 6B — alternative finance treatment for the historic arrangement
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 supplied HMRC page appears to describe a historic rule. It should not be treated as a current SDLT route for a purchase in England or Northern Ireland.
- The supplied statutory material is current only to the dates recorded in its currency notice. Current legislation should be checked before relying on this page for a live transaction.
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.
- the date and place of the transaction
- the finance documents and parties involved
- whether a company or similar body was buying
- the price attributed to the home interest
- the intended use of the property
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 Alternative finance and the historic 17% stamp duty rule [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 72A - historic Scottish shared ownership finance arrangement https://www.legislation.gov.uk/ukpga/2003/14/section/72A/2025-11-17 - FA 2003 Schedule 4A para 1 - when a home interest exceeds the higher threshold https://www.legislation.gov.uk/ukpga/2003/14/schedule/4A/paragraph/1/2025-11-17 - FA 2003 Schedule 4A para 3 - 17% rate for certain company home purchases https://www.legislation.gov.uk/ukpga/2003/14/schedule/4A/paragraph/3/2025-11-17 - FA 2003 Schedule 4A para 5 - business exclusions from the 17% company rate https://www.legislation.gov.uk/ukpga/2003/14/schedule/4A/paragraph/5/2025-11-17 - FA 2003 Schedule 4A para 6B - alternative finance treatment for the historic arrangement https://www.legislation.gov.uk/ukpga/2003/14/schedule/4A/paragraph/6B/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/sdltm09695 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 supplied HMRC page appears to describe a historic rule. It should not be treated as a current SDLT route for a purchase in England or Northern Ireland. - The supplied statutory material is current only to the dates recorded in its currency notice. Current legislation should be checked before relying on this page for a live transaction. 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 31 August 2026
Useful article? You may find it helpful to read the original guidance here: Alternative finance and the historic 17% stamp duty rule
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