Example of Subsales: Land Purchase Agreements and Stamp Duty Implications

SDLT in a Chain of Subsales Completing Together

Where land is sold on several times before completion and all contracts complete at the same time, SDLT can potentially arise on each contract in the chain under the normal rules. Intermediate buyers are not automatically ignored, but they may avoid a charge if subsale relief applies. The final buyer is usually taxed on the price payable under the final contract.

• In a chain of subsales, the original sale is followed by one or more onward sales before the first contract completes.
• Under section 44 FA 2003, each buyer in the chain can potentially be treated as making a chargeable land transaction.
• Intermediate buyers may still face SDLT unless they can claim subsale relief and meet the legal conditions for it.
• If all contracts complete together, the final buyer is charged SDLT on the consideration under the final purchase contract.
• Deposits are part of the payment structure, but the relevant consideration is the full agreed price under each contract, not just the balance paid on completion.
• When analysing these arrangements, check the order of contracts, timing of completion, full consideration, and whether relief is actually available.

Scroll down for the full analysis.

SDLT and a chain of subsales: who is taxed when contracts complete together?

This page explains how SDLT works where the same land is sold on more than once before completion, and all the contracts complete at the same time. The point matters because, without relief, more than one buyer in the chain can be treated as making a taxable land transaction.

What this rule is about

The source deals with a series of subsales. That means there is an original contract for land, then one or more onward contracts before the first one completes. In practice, the land is being passed down a chain of buyers.

The SDLT issue is that section 44 FA 2003 contains the normal rule for contracts completed by a transfer. Under that rule, each contract in the chain can potentially give rise to a charge on the buyer under that contract. Relief may then be needed to prevent inappropriate double or multiple charges where the transaction has effectively been passed on before completion.

What the official source says

The HMRC manual gives this example:

• A contracts to sell land to B for £1 million. B pays A a £100,000 deposit.
• B then contracts to sell the same land to C for £1 million. C pays B a £100,000 deposit.
• C then contracts to sell the same land to D for £1.1 million. D pays C a £200,000 deposit.
• All contracts complete together. On completion, D pays C £900,000, C pays B £900,000, and B pays A £900,000.

HMRC’s stated outcome is:

• B is chargeable on £1 million under the normal section 44 rules, but can claim relief.
• C is also chargeable on £1 million under the normal section 44 rules, but can claim relief.
• D is chargeable on £1.1 million.

The manual cross-refers to another example for D, but the practical point is clear: the final person in the chain is taxed on the price payable under that final onward contract, while the intermediate buyers are only protected if the relevant relief is available and claimed.

What this means in practice

The example shows two important points.

First, intermediate buyers are not automatically ignored just because they never end up keeping the land. Under the normal contract-completion rules, B and C are each treated as having entered into chargeable transactions for £1 million.

Second, the SDLT system then relies on subsale relief to remove the charge on those intermediate transactions where the statutory conditions are met. HMRC’s example assumes that relief is available to B and C.

The final buyer, D, is the person who ends up bearing SDLT on the acquisition that actually lands with them. In this example D pays tax on £1.1 million, because that is the consideration under D’s purchase from C.

The deposits do not change that overall result in the example. They are part of the payment mechanics, but the chargeable consideration remains the full contract price under each relevant contract.

How to analyse it

When looking at a chain of subsales, ask these questions in order:

• What is the sequence of contracts? Identify the original seller, each intermediate buyer, and the final buyer.
• Did an onward sale happen before the earlier contract completed? If so, subsale rules may be relevant.
• Did the contracts complete together, or in some other order? Timing can matter to the SDLT analysis.
• What is the consideration under each contract? Do not focus only on the balancing payment at completion; include deposits and the full agreed price.
• Under the normal section 44 rules, which buyers would be chargeable if no relief applied? In a chain, this can include more than one person.
• Is relief available to the intermediate buyers? HMRC’s example assumes yes, but that depends on the statutory conditions being met.
• Who is the final acquirer, and what consideration is that person giving under the final contract?

A practical way to think about it is this: start with the default position that each contract can be taxable, then test whether the intermediate transactions are taken out by subsale relief.

Example

Suppose a developer agrees to buy land for £1 million, then immediately agrees to sell it on for the same amount to an investor, who then agrees to sell it on to an end buyer for £1.1 million. All three deals complete on the same day as part of one coordinated completion.

On the HMRC example’s approach:

• the developer is chargeable on £1 million under the normal rules, but can claim relief;
• the investor is also chargeable on £1 million under the normal rules, but can claim relief; and
• the end buyer is chargeable on £1.1 million.

So the chain does not by itself eliminate SDLT for the intermediate parties. Relief has to do that.

Why this can be difficult in practice

The manual example is short and assumes the relief conditions are satisfied. Real transactions are often less tidy.

Difficulties can arise over whether there really is a qualifying subsale, whether the timing works in the right order, and whether the intermediate party has done anything that affects the availability of relief before completion. It is also easy to focus on the net funds moving on completion and overlook the full contractual consideration.

Another practical difficulty is that a chain may look commercially simple but still involve multiple potential SDLT charges if the relief analysis is not done correctly. The fact that all completions happen together does not, by itself, mean that only the final buyer needs to be considered.

Key takeaways

• In a series of subsales, each intermediate contract can be taxable under the normal section 44 rules.
• Intermediate buyers may need subsale relief to eliminate their SDLT charge; the relief is not irrelevant just because they are in the middle of a chain.
• The final buyer is charged by reference to the consideration under the final acquisition, which in HMRC’s example is £1.1 million.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Example of Subsales: Land Purchase Agreements and Stamp Duty Implications

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