Example 7: Land Transaction Assignments and Chargeable Considerations for Plots 1

SDLT where a land contract is assigned in return for another property

When a buyer assigns a land purchase contract to someone else and receives a different property instead of cash, SDLT can apply to several linked transactions at once. HMRC’s example shows that both cash and non-cash consideration must be valued, market value may override lower figures, and the original buyer may still have an SDLT position even though it never takes title to the first property.

• The arrangement creates separate SDLT transactions, including the original contract, the assignment, B’s acquisition of Plot 2, and C’s acquisition of Plot 1.
• B is treated as having a notional land transaction for £1 million under HMRC’s reading of the rules, although relief may be available.
• B is also taxed on receiving Plot 2 from C, with chargeable consideration of £500,000 because the rights B gave up are valued higher than Plot 2’s £400,000 market value.
• C is taxed on acquiring Plot 1 by reference to the higher of market value and what C gave, so the chargeable consideration is £1 million rather than £900,000.
• For SDLT, consideration is not limited to cash: it can include land, contractual rights, and other money’s worth.
• The practical lesson is to analyse each step separately and not assume SDLT follows the commercial bargain or the cash paid on completion.

Scroll down for the full analysis.

SDLT on an assigned land contract where the assignee gives other land in return

This page explains an HMRC example about a fairly technical SDLT situation: a buyer under a land contract assigns that contract to someone else, and in return receives a different property rather than cash. The example matters because SDLT can arise on more than one transaction at once, and the amount taxed may not be the figure the parties instinctively expect.

What this rule is about

The source deals with three linked steps:

• A agrees to sell Plot 1 to B for £1 million, and B pays a £500,000 deposit.
• B then assigns its rights under that contract to C.
• Instead of C paying cash to B for the assignment, C transfers Plot 2 to B. Plot 2 is worth £400,000.

On completion, C pays A the remaining £500,000 and acquires Plot 1.

The legal issue is how SDLT treats an assignment of contractual rights where the assignment consideration is another land transaction. The rules on exchanges and assignments can deem there to be chargeable consideration based on market value or on what is given in money or money’s worth. That can produce results which are not obvious from the cash actually changing hands.

What the official source says

HMRC’s example says that section 47 and paragraph 5 of Schedule 4 apply.

It then identifies three SDLT consequences:

• B is treated as entering into a notional land transaction under paragraph 5. The chargeable consideration for that notional transaction is £1 million. HMRC says relief can be claimed for that notional charge.
• B is also chargeable on acquiring Plot 2 from C. The chargeable consideration is the greater of:
  • the market value of Plot 2, which is £400,000, and
  • what B gave for Plot 2.
• HMRC says B gave the right to complete on Plot 1, valued at £500,000. Because that right was given only for Plot 2, it is not apportioned. So B’s chargeable consideration for Plot 2 is £500,000.
• C is chargeable on acquiring Plot 1. HMRC says the consideration is determined under paragraph 5 of Schedule 4. The market value of Plot 1 is £1 million. The alternative calculation based on what C gave comes to £900,000, made up of:
  • £500,000 paid by C to A on completion, and
  • £400,000, being the value of Plot 2 given by C as consideration for the assignment.
• Because the rule takes the larger amount, C’s chargeable consideration for Plot 1 is £1 million.

What this means in practice

The example shows that an assignment can create more than one SDLT-relevant event.

First, the original buyer, B, does not simply disappear from the SDLT picture because it assigns the contract. The legislation treats B as having a notional land transaction, although HMRC notes that relief may be available for that charge.

Second, the assignment itself can amount to consideration for a separate land transfer. Here, B receives Plot 2 in return for assigning its rights over Plot 1. That means B is not only the assignor; it is also an acquirer of land, and SDLT must be worked out on that acquisition.

Third, the final acquirer, C, is taxed on Plot 1 by looking not just at the cash paid on completion, but at the full value given for the overall acquisition. That includes both the completion payment to A and the property transferred to B for the assignment. Even then, the legislation can substitute market value if it is higher.

The practical result is that:

• cash paid is not the whole story;
• non-cash consideration, including land, must be valued;
• market value may override a lower figure; and
• the same commercial arrangement can produce separate SDLT analyses for different parties.

How to analyse it

In a case like this, a sensible way to analyse the SDLT position is to ask the following questions.

1. What are the separate land transactions?

Do not treat the arrangement as a single sale. Here there are at least:

• the original contract for Plot 1;
• the assignment of B’s rights to C;
• the acquisition of Plot 2 by B from C; and
• the completion acquisition of Plot 1 by C from A.

2. Is the assignee entering one transaction as purchaser in return for entering another as vendor?

That is the exchange-style feature HMRC is highlighting. C acquires Plot 1 as purchaser, while transferring Plot 2 to B as vendor in another transaction. That is why section 47 and paragraph 5 of Schedule 4 are engaged in HMRC’s analysis.

3. What did each party actually give?

For SDLT, consideration is not limited to cash. In this example:

• B gave up its right to complete the purchase of Plot 1;
• C gave Plot 2 to B and £500,000 to A;
• those non-cash elements must be given a value in money or money’s worth.

4. Does the legislation require a comparison with market value?

Yes. HMRC’s example applies a greater-of test. For both B’s acquisition of Plot 2 and C’s acquisition of Plot 1, the chargeable consideration is not simply what was given if market value is higher.

5. Can any amount be apportioned?

HMRC says no apportionment is possible in this example because B’s right to complete on Plot 1 was given only for Plot 2. That matters because if consideration is given for more than one thing, apportionment may become an issue. Here HMRC’s view is that the facts do not allow it.

6. Is there a notional land transaction for the assignor?

Yes, under HMRC’s reading of paragraph 5. The source says B is chargeable on a notional land transaction with chargeable consideration of £1 million, although relief can be claimed. In practice, that means the assignor’s SDLT position still needs to be reviewed even if the assignor never takes title to the land.

Example

Illustration based on the source material:

• A agrees to sell Plot 1 to B for £1 million.
• B pays a £500,000 deposit.
• B later assigns the contract to C.
• Instead of paying B cash for the assignment, C transfers Plot 2 to B. Plot 2 is worth £400,000.
• C then pays A the remaining £500,000 and completes the purchase of Plot 1.

On HMRC’s analysis:

• B has a notional land transaction with chargeable consideration of £1 million, though relief may be available.
• B’s acquisition of Plot 2 is taxed on £500,000, not £400,000, because B is treated as giving £500,000 worth of rights for Plot 2 and that is higher than Plot 2’s market value.
• C’s acquisition of Plot 1 is taxed on £1 million, not £900,000, because the market value of Plot 1 is higher than the total value of what C gave.

Why this can be difficult in practice

These cases are easy to misread because the commercial logic and the SDLT logic are not the same.

One difficulty is that the parties may focus on the economics of the bargain. B accepts Plot 2 even though it is worth only £400,000 because it is commercially useful. But SDLT does not simply ask whether the bargain made sense commercially. It asks what was given, what it was worth, and whether market value substitution applies.

Another difficulty is identifying exactly what right is being assigned and what value should be attached to it. HMRC’s example treats B’s right to complete on Plot 1 as worth £500,000. That reflects the remaining value embedded in the contract position on the facts given. In a real case, valuing assigned rights may be more contentious if the contract terms, deposit arrangements, or market conditions are more complicated.

There can also be confusion between the notional transaction for the assignor and the actual land acquisition by the assignor from the assignee. They are separate parts of the SDLT analysis and should not be merged.

Finally, this is an area where the legislation is highly mechanical. A party may think only one purchase is taking place, but the SDLT rules can identify several transactions and several different measures of consideration.

Key takeaways

• An assignment of a land contract can trigger SDLT consequences for both the assignor and the assignee, and may also create a separate taxable acquisition if land is given in return.
• Chargeable consideration can include non-cash value, such as contractual rights or another property, and market value may override a lower figure.
• In exchange-style arrangements, each transaction and each item of consideration must be analysed separately rather than looking only at the final completion payment.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Example 7: Land Transaction Assignments and Chargeable Considerations for Plots 1

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