Shared ownership SDLT1 notes: market value elections and staircasing
Shared ownership SDLT1 notes
HMRC’s notes set out how certain shared ownership leases and staircasing events were recorded on the SDLT1 return. The key fact is whether a market value election was made on the original lease.
- A market value election is irrevocable.
- Without an election, the 80% ownership point is important.
- The SDLT1 box instructions may be historic and need current verification.
Scroll down for the full analysis.
Read the original guidance here:
Shared ownership SDLT1 notes: market value elections and staircasing
Shared ownership SDLT1 notes: market value elections and staircasing
Buying more of your shared ownership home can trigger a stamp duty land tax, or SDLT, question. HMRC’s notes explain how filers recorded certain shared ownership events on the SDLT1 return. They are useful as a record of HMRC’s approach, but the box numbers and codes may not be the current filing method.
What this rule is about
A shared ownership lease usually starts with you buying a percentage of a home and paying rent on the rest. Later, you may buy further shares. People call this staircasing.
There are two broad tax routes. You may make a market value election when the landlord grants the original lease. Or you may not make one. That choice can change the tax treatment of the first lease and later payments.
The election is a serious choice: the legislation says it cannot be withdrawn. You must make it in the original return or an amendment to it.
What the official source says
HMRC’s source gives separate SDLT1 entries for the original shared ownership lease and for later staircasing. It distinguishes a lease that gives a right to the freehold from one where you staircase through a leasehold interest.
- For an original lease with a market value election and a freehold reversion available, HMRC says to use transaction code L.
- HMRC says box 22 should show the market value stated in the lease, while box 24 shows the tax on that value.
- For a leasehold shared ownership arrangement with an election, HMRC says to enter the minimum rent, the stated open-market premium and the net present value of that rent.
- Filers entered a peppercorn minimum rent as zero in box 20.
- Without an election, HMRC says to enter the actual premium and the initial rent over the full lease term.
- For that route, the return separated tax on the premium from tax on the rent’s net present value.
Net present value, often shortened to NPV, is a way of putting future rent payments into one present-day figure. The tax law has a separate method for tax on rent.
The source also says that a staircasing payment which takes the buyer above an 80% share, where no election was made, required notification only if the relevant amount exceeded the SDLT threshold. It instructed users to enter code O and mark the transaction as linked.
For a market value election, HMRC’s notes showed the final transfer of the freehold or the grant of the maximum leasehold interest as notifiable even where no tax was due. HMRC’s notes used relief code 28 and a tax figure of zero.
What this means in practice
Do not treat every payment for an extra share in your home in the same way. The first question is whether you made an election when the shared ownership lease began.
With a valid market value election, the law can exempt later staircasing and the final transfer of the freehold, provided you paid tax due on the original lease. Without one, the 80% point matters.
- Find the original SDLT return before completing anything for a later purchase.
- Check whether it includes a market value election.
- Check the percentage you owned immediately before and after the new payment.
- Keep the lease, staircasing notice and completion statement together.
- Do not assume you can skip a return because no tax is due.
- Do not assume that a return is needed means tax is due.
This is the part people get wrong. A market value election is not simply a label used by your housing provider. It is a tax election with a fixed legal effect.
How to analyse it
Start with the documents, not the online form. The form records the answer; it does not decide it.
- Identify the event: an original lease, an extra share, a new lease or the final freehold transfer.
- Confirm that the lease is a qualifying shared ownership lease from a qualifying housing body.
- Read the original lease for its market value, premium, rent and any right to buy further shares.
- Check whether you made a market value election in the original SDLT return or a valid amendment.
- If no election was made, calculate the total share held immediately after the new purchase.
- Check whether the event must be notified separately from calculating any tax.
- Only then match the facts to HMRC’s current return process.
HMRC’s SDLT1 notes also refer to disadvantaged areas relief code 05. That relief reference is a warning that these are older completion notes. Do not use a historic relief code in a live return without checking current HMRC instructions.
Example
Amir owns a 75% share of his home. He did not make a market value election when the lease began. He pays £41,000 for a further 10%, taking his total share to 85%.
The 80% exemption no longer applies once Amir holds 85%. HMRC’s source says this type of transaction required notification only when the relevant amount exceeded the SDLT threshold, and says it linked the transaction to the original lease or an earlier staircasing transaction for that purpose. The source does not provide a tax calculation, so it would be wrong to invent one.
If Amir had made a valid market value election and paid any tax due on the original lease, the legislation may instead exempt the later purchase. The original return is therefore vital.
Why this can be difficult in practice
Shared ownership paperwork often uses everyday phrases such as “buying the rest” or “final share”. Those phrases do not settle the SDLT position. The legal document may transfer the freehold, grant a replacement lease, or simply change the percentage held.
There is also an important date issue. HMRC’s source says certain over-80% payments without an election were linked to the original lease. Current legislation treats the original grant as unlinked from later staircasing when working out tax. Older transactions may have different rules.
- A final payment may buy the freehold, not another leasehold share.
- A replacement lease can require different return entries from a freehold transfer.
- The 80% test looks at the total share after the payment.
- You need to check the wording for a payment of exactly £40,000 against the law for the transaction date.
- Old SDLT1 box numbers may not appear in the current HMRC service.
Key takeaways
- Check the original return for a market value election first.
- The 80% ownership point matters where no election was made.
- Use HMRC’s old SDLT1 notes with care and verify the current filing process.
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 70 — shared ownership rules are contained in schedule 9
- FA 2003 Schedule 9 para 2 — market value election for leases with full ownership
- FA 2003 Schedule 9 para 3 — exemption on transfer of the freehold after election
- FA 2003 Schedule 9 para 4 — market value election for staircasing shared ownership leases
- FA 2003 Schedule 9 para 4A — tax treatment of shared ownership staircasing payments
- FA 2003 Schedule 9 para 4B — grant treated as unlinked from later staircasing
- FA 2003 Schedule 9 para 5 — which housing bodies qualify for shared ownership rules
- FA 2003 Schedule 5 para 2 — tax on rent based on its net present value
- FA 2003 Schedule 5 para 3 — method for calculating rent net present value
- FA 2003 section 76 — duty to send a return for notifiable transactions
- FA 2003 section 77 — transactions that must be notified to HMRC
- FA 2003 section 77A — exceptions from notification for certain land interests
- FA 2003 Schedule 10 para 1 — required form and information for a land transaction return
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 source says that some over-80% staircasing payments without an election are linked to the original lease or earlier staircasing. Current Schedule 9 paragraph 4B says the original grant is treated as unlinked from later staircasing when working out tax. The correct treatment depends on the transaction date and needs checking against the law then in force.
- The source says a final freehold payment without an election is notifiable if it exceeds £40,000. Current section 77A uses an exception for consideration that is less than £40,000, so a payment of exactly £40,000 needs careful checking.
- The supplied statutory material is current only to 17 November 2025. Current filing requirements and the live HMRC form need verification before publication or use.
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 shared ownership lease and any later replacement lease
- the lease statement of market value, open-market premium and minimum rent
- the original SDLT return and any market value election
- proof that any SDLT due on the original lease was paid
- each staircasing agreement and the percentage owned before and after it
- the amount of each premium, final payment and rent obligation
- the effective date of each transaction
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 Shared ownership SDLT1 notes: market value elections and staircasing [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 70 - shared ownership rules are contained in schedule 9 https://www.legislation.gov.uk/ukpga/2003/14/section/70/2025-11-17 - FA 2003 Schedule 9 para 2 - market value election for leases with full ownership https://www.legislation.gov.uk/ukpga/2003/14/schedule/9/paragraph/2/2025-11-17 - FA 2003 Schedule 9 para 3 - exemption on transfer of the freehold after election https://www.legislation.gov.uk/ukpga/2003/14/schedule/9/paragraph/3/2025-11-17 - FA 2003 Schedule 9 para 4 - market value election for staircasing shared ownership leases https://www.legislation.gov.uk/ukpga/2003/14/schedule/9/paragraph/4/2025-11-17 - FA 2003 Schedule 9 para 4A - tax treatment of shared ownership staircasing payments https://www.legislation.gov.uk/ukpga/2003/14/schedule/9/paragraph/4A/2025-11-17 - FA 2003 Schedule 9 para 4B - grant treated as unlinked from later staircasing https://www.legislation.gov.uk/ukpga/2003/14/schedule/9/paragraph/4B/2025-11-17 - FA 2003 Schedule 9 para 5 - which housing bodies qualify for shared ownership rules https://www.legislation.gov.uk/ukpga/2003/14/schedule/9/paragraph/5/2025-11-17 - FA 2003 Schedule 5 para 2 - tax on rent based on its net present value https://www.legislation.gov.uk/ukpga/2003/14/schedule/5/paragraph/2/2025-11-17 - FA 2003 Schedule 5 para 3 - method for calculating rent net present value https://www.legislation.gov.uk/ukpga/2003/14/schedule/5/paragraph/3/2025-11-17 - FA 2003 section 76 - duty to send a return for notifiable transactions https://www.legislation.gov.uk/ukpga/2003/14/section/76/2025-11-17 - FA 2003 section 77 - transactions that must be notified to HMRC https://www.legislation.gov.uk/ukpga/2003/14/section/77/2025-11-17 - FA 2003 section 77A - exceptions from notification for certain land interests https://www.legislation.gov.uk/ukpga/2003/14/section/77A/2025-11-17 - FA 2003 Schedule 10 para 1 - required form and information for a land transaction return https://www.legislation.gov.uk/ukpga/2003/14/schedule/10/paragraph/1/2025-11-17 HMRC's guidance page on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm27080 HOW I WANT YOU TO ANSWER 1. Work from the legislation above. Read it before answering. HMRC guidance is HMRC's 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 source says that some over-80% staircasing payments without an election are linked to the original lease or earlier staircasing. Current Schedule 9 paragraph 4B says the original grant is treated as unlinked from later staircasing when working out tax. The correct treatment depends on the transaction date and needs checking against the law then in force. - The source says a final freehold payment without an election is notifiable if it exceeds £40,000. Current section 77A uses an exception for consideration that is less than £40,000, so a payment of exactly £40,000 needs careful checking. - The supplied statutory material is current only to 17 November 2025. Current filing requirements and the live HMRC form need verification before publication or use. 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 1 September 2026
Useful article? You may find it helpful to read the original guidance here: Shared ownership SDLT1 notes: market value elections and staircasing
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