Read the original guidance here:
HMRC SDLT: SDLTM49300 – Commencement and transitional provisions

SDLTM49300 – Commencement and Transitional Provisions

Contracts Entered Into Before 10 July 2003

When dealing with land transactions that are based on contracts made on or before 10 July 2003, there are specific rules that apply. These rules are important for understanding whether a stamp duty land tax (SDLT) transaction is triggered under the Finance Act 2003 (FA03).

Substantial Performance of Contracts

If a contract was substantially performed on or before 10 July 2003, the transaction does not fall under the category of a stamp duty land tax transaction. You can refer to SDLTM07700 for more details about what constitutes substantial performance.

Example 1:
– A contract was signed on 5 July 2003 and all key terms were completed by 9 July 2003. This qualifies as substantial performance, meaning the transaction is exempt from stamp duty land tax.

Contracts Not Substantially Performed

If a contract was not substantially performed by 10 July 2003, the transaction may still not be subject to stamp duty land tax if specific conditions are met:

1. Variations to the Contract:
– If any changes were made to the contract after 10 July 2003, such as modifying its terms, this could result in a stamp duty tax being applicable.

2. Exercise of Options or Rights:
– If an option, right of pre-emption, or similar right was exercised after 10 July 2003, this may also trigger a stamp duty land tax transaction.

3. Assignments or Sales:
– If, after 10 July 2003, there is an assignment or sale concerning the whole or part of what the contract relates to, this could allow another individual (different from the original purchaser) to request a conveyance. In this instance, stamp duty land tax would apply.

Example 2:
– A contract signed on 1 June 2003 was not substantially performed until 15 August 2003. On 1 September 2003, the purchaser transferred their rights in the contract to another party. Since this transfer occurred after 10 July 2003, stamp duty land tax would apply.

Variation of Contracts

A change in the contract that might lead to a stamp duty land tax transaction includes alterations to any of the following elements:

– The subject matter of the contract (for example, if the property being sold changes).
– The parties involved in the transaction (for instance, if one party withdraws and another takes their place).
– The financial terms of the contract (like a change in purchase price).
– In the case of lease agreements, changes to the length of the lease term.

However, not every change will result in a variation leading to stamp duty tax. Changes deemed insignificant — such as minor adjustments to colour schemes or alterations to the completion dates — might not qualify as a variation.

Assignments of Rights

It’s important to note that the reference to ‘assignment of rights’ only applies to assignments made by the purchaser within the contract. This aligns with FA03/SCH19/PARA3(3)(c), which specifies that it is only regarding a change of purchaser that tax implications may arise.

Therefore, if the only alteration in the contract relates to the party selling or transferring the land (the vendor), the original contract remains protected from stamp duty land tax.