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HMRC SDLT: SDLTM29841 – Linked Transactions – further detail

SDLT29841 – Linked Transactions – Further Detail

This article explains when HMRC allows relief on certain tax when purchasing a property, specifically linked transactions related to a dwelling.

What are Linked Transactions?

When buying a property, there may be situations where you are involved in more than one transaction. These transactions can be connected or ‘linked’. Normally, relief for Stamp Duty Land Tax (SDLT) applies strictly to the purchase of a dwelling. However, relief can also include other transactions if they are linked to the purchase.

When Can You Claim Relief for Linked Transactions?

You can claim relief on a linked transaction if:

• The main focus of the transaction involves gardens or grounds associated with the purchased dwelling, or if it concerns interests benefiting the purchased dwelling.
• All buyers involved in the linked transaction are also buyers of the dwelling. In other words, there should not be any additional purchasers involved in the linked transaction who are not part of the dwelling purchase.

How Can Linked Transactions Affect Your Relief?

A linked transaction can sometimes mean that relief that was originally available is no longer applicable. This could happen in the following circumstances:

• If a linked transaction is present, the topic of which does not include gardens, grounds, or interests benefiting the purchased dwelling.
• If a linked transaction increases the total amount of consideration for all linked transactions over the threshold of £625,000.

Reporting Transactions on the Same Day

If multiple linked transactions occur on the same day, you can report all of them in a single return. Remember to only claim relief where it is justifiable, accounting for all the linked transactions involved.

Handling Later Linked Transactions

If a linked transaction occurs before you submit your return to HMRC for the initial transaction, you must consider all transactions up until the submission date in determining whether you are eligible for relief and how much relief you can claim.

In contrast, if a linked transaction arises after you have already submitted your return, standard procedures apply for updating your tax calculations. This means that if a later transaction impacts the amount of tax due on the initial transaction, you need to submit an additional return that recalculates the SDLT due. This is done by considering the withdrawal of relief and/or any increase in the relevant total amounts.

Deadline for Submitting Further Returns

The additional return must be submitted within 30 days of when the later linked transaction occurred. If there is an increase in tax associated with the original transaction, it must also be paid within that same 30-day period. This is specified under section 81A of FA03.

More Resources for Linked Transactions

If you want to explore more about linked transactions and SDLT, you can refer to the SDLT Manual, particularly section SDLTM50350 which provides further guidance.