Example of Assignments of Rights in Land Transactions and Tax Implications

SDLT on assigning contract rights before completion

When a buyer assigns its rights under a land contract to someone else before completion, the person who completes the purchase is usually charged SDLT on both the amount paid to the seller and the amount paid for the assignment. The original buyer may also be treated as entering into a separate notional transaction, but full relief may be available if the legal conditions are met.

• In the example, B agrees to buy land from A for £1 million, then assigns the contract to C for £100,000 before completion.
• C completes the purchase with A and is treated as the purchaser for SDLT purposes.
• C’s chargeable consideration is £1.1 million, being the £1 million paid to A plus the £100,000 paid to B for the assignment.
• For C’s SDLT return, the seller is A, not B, even though C paid B for the contract rights.
• B is deemed to have a separate notional land transaction for £1 million and may need to file a return and claim relief.
• The relief for B is not automatic and depends on the conditions in Schedule 2A being satisfied.

Scroll down for the full analysis.

SDLT on a simple assignment of rights before completion

This page explains how SDLT works where a buyer under a land contract passes its rights to someone else before completion, and the new buyer then completes the purchase. The example is simple, but it shows an important point: SDLT can look at both the original sale price and the payment for the assignment, and it can also create a separate notional transaction for the original buyer, usually relieved if the statutory conditions are met.

What this rule is about

The source material deals with a pre-completion transaction under Schedule 2A to the SDLT rules. In broad terms, that means something happens to the buyer’s rights under a land contract before the purchase actually completes.

Here, the original buyer does not complete the purchase itself. Instead, it assigns its contractual rights to another person for a payment. The assignee then completes with the seller.

Without special rules, it would be unclear who is treated as the purchaser for SDLT and what amount should be taxed. Schedule 2A deals with that. It identifies:

• the SDLT position of the person who takes over the contract and completes the purchase, and
• the SDLT position of the original buyer who assigned its rights away.

What the official source says

The example uses three parties:

• A is the seller.
• B agrees to buy the land from A for £1 million, payable on completion.
• Before completion, B assigns its rights under that contract to C for £100,000.
• C then completes the acquisition and pays A £1 million.

The official view is that this falls within the Schedule 2A rules for a pre-completion transaction, and specifically an assignment of rights.

Under those rules:

• the original contract is the contract between A and B,
• the original purchaser is B,
• the transferor is B, and
• the transferee is C.

C is not treated as entering into a land transaction merely because of the assignment itself. Instead, C is treated as the purchaser under the land transaction that completes the acquisition from A.

For C’s SDLT calculation, the chargeable consideration includes both:

• the £1 million paid to A under the original contract, and
• the £100,000 paid to B for the assignment.

So C’s total chargeable consideration is £1.1 million.

The seller shown on C’s SDLT return is A, not B.

As for B, the rules deem B to be the purchaser in a separate notional land transaction with the same effective date as C’s transaction. For that notional transaction, the chargeable consideration is £1 million. However, the official source says that full relief is available under paragraph 15, subject to the conditions in paragraphs 15 and 18.

What this means in practice

The practical effect is that the person who steps into the contract and completes the purchase cannot usually look only at the amount paid to the seller. If that person also paid the original buyer for the assignment, that payment is brought into the SDLT calculation as well.

In this example, C pays £1 million to get the land from A, but C also pays £100,000 to B to obtain the right to complete the purchase. HMRC’s example treats both amounts as part of the chargeable consideration for C’s acquisition. So C files and pays SDLT by reference to £1.1 million, not £1 million.

At the same time, the legislation creates a deemed transaction for B. That might sound like double taxation, but the structure of the rules is that B is expected to file a land transaction return for that notional transaction and claim relief if the statutory conditions are met. The intended outcome in the example is:

• B files a return showing consideration of £1 million and claims full relief, and
• C files a return showing consideration of £1.1 million.

This matters because a party involved in an assignment may wrongly assume that only the completing buyer has an SDLT filing obligation, or that the assignment payment sits outside SDLT. The example shows that neither assumption is safe.

How to analyse it

When looking at a pre-completion assignment of rights, it helps to work through the transaction in stages.

• First, identify the original land contract. Who agreed to buy the land from the seller, and on what terms?
• Second, ask whether there was a pre-completion transaction. Did the original buyer assign its rights under the contract before completion?
• Third, identify the parties for Schedule 2A purposes. The original purchaser and transferor will usually be the assigning buyer, and the transferee will be the person taking over the contract.
• Fourth, identify who actually completes the purchase from the seller. That person is normally the one treated as purchaser for the completed acquisition.
• Fifth, calculate the transferee’s chargeable consideration. The source example shows that this can include both the amount paid to the seller and the amount paid to the original buyer for the assignment.
• Sixth, consider the original buyer’s notional land transaction. The legislation may deem one to exist even though the original buyer never takes title to the land.
• Seventh, check whether relief is available for that notional transaction, and whether the statutory conditions for the relief are satisfied.
• Finally, make sure the SDLT return reflects the correct vendor and effective date. In the example, the vendor for C’s acquisition is A.

The key practical question is not just “who bought the land?” but “what payments were made to make that completion happen, and to whom?”

Example

A agrees to sell land to B for £1 million. Before completion, B assigns the benefit of the contract to C in return for £100,000. C then completes the purchase and pays A the £1 million purchase price.

On the official analysis:

• C is treated as the purchaser on completion.
• C’s chargeable consideration is £1.1 million, made up of the £1 million paid to A and the £100,000 paid to B.
• B is treated as purchaser in a separate notional transaction with chargeable consideration of £1 million.
• B can claim full relief for that notional transaction if the relevant conditions are met.

So there may be two returns in the overall arrangement, even though only one person ends up acquiring the land.

Why this can be difficult in practice

The main difficulty is that the legal structure and the economic reality do not line up neatly. B never acquires the land, yet the legislation still creates a deemed land transaction for B. C pays part of the overall cost to the seller and part to B, but both amounts can matter for SDLT on C’s acquisition.

Another practical difficulty is that the relief for B is not automatic in the abstract. The source says full relief is available subject to the conditions in paragraphs 15 and 18. So it is not enough simply to identify an assignment of rights. You must also check that the conditions for relief are actually met.

It can also be easy to complete the SDLT return incorrectly if the parties focus on the assignment agreement rather than the completed land transaction. The source specifically says that, for C’s acquisition, the vendor is A. That matters for return completion.

Finally, this example is deliberately simple. Real transactions may involve deposits, multiple payments, partial assignments, sub-sales, variations, or linked arrangements. Those features can affect how the Schedule 2A rules apply and whether the simple example can be followed directly.

Key takeaways

• Where rights under a land contract are assigned before completion, the completing buyer’s SDLT chargeable consideration can include both the purchase price paid to the seller and the payment made for the assignment.
• The original buyer may still be treated as party to a separate notional land transaction, even though it never acquires the land.
• In the example, the original buyer is expected to file a return and claim relief, while the transferee files on the full combined consideration.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Example of Assignments of Rights in Land Transactions and Tax Implications

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