Read the original guidance here:
HMRC SDLT: SDLTM62050 – Processing: Further guidance for completing forms SDLT1, SDLT3 and SDLT4: Further guidance for question 2 SDLT1, descriptions of transactions

Guidance on Completing SDLT1 Forms: Question 2 Explained

Question 2 on the SDLT1 form, whether on paper or online, requires you to choose from four specific codes: F, L, A, or O. Each code represents a different type of transaction related to property or lease agreements. Below is a breakdown of each code with explanations and examples for clarity.

Code F – Conveyance or Transfer

Code F applies to the transfer of freehold property in England and Northern Ireland. This includes:

• Any transfer of freehold ownership, whether it is legal or equitable.
• Commonhold properties are also included under this code.

However, if the property transfer involves land that is already subject to a lease, you should use code A instead. For instance:

• If you are buying a house or building outright, you would select code F.
• If you are purchasing a freehold property but it has an existing lease attached, you would instead select code A.

Code L – Grant of Lease

Code L is designated for instances where a new lease is granted. This can be for:

• A new lease that has been created.
• A replacement lease if a prior lease has expired or ended.
• Variations of existing leases that result in an increase of rent.
• Any changes to a lease which involve surrendering and re-granting by law (specific to England and Northern Ireland).

Whenever tax is applicable to the rent or premium of a new lease, code L must be applied. If you are filling out the paper version of SDLT1, you must also answer questions 16 through 25. When completing the online version, you’ll be directed to the right questions based on your selection.

For detailed information regarding variations of leases, refer to SDLTM15010.

Code A – Any Other Transaction Involving a Lease

Use code A for any other property transactions that involve a lease but do not fit into the other categories. This includes transactions such as:

• The assignment or assignation of an existing lease.
• Transferring a freehold that is already under lease.
• The tenant surrendering or renouncing their lease.
• The acquisition of freehold or leasehold reversion by a tenant.

When selecting code A, it is important to provide more information in the ‘About Leases’ section. Also, ensure you answer questions 16 through 21 but do not complete questions 22 through 25 when using this code. If you’re filling out the online form, you will encounter questions specific to your transaction.

Code O – Other Transactions

Code O covers any acquisitions that do not fall under codes A, F, or L. Some examples of transactions classified under code O include:

• Acquiring an easement or servitude.
• Acquiring sporting rights.
• Variations of a lease that lower the rent.
• Changes to a lease that reduce its term when a return is required from the lessor.

For transactions classified under code O, you only need to complete the SDLT1 form if Stamp Duty Land Tax (SDLT) is chargeable at a rate of 1% or more. In such cases, leave questions 16 to 25 blank.

Important Considerations for Each Code

When filling out the SDLT1 form, care must be taken to accurately select the appropriate code based on the nature of the property transaction. Misclassifying the transaction can result in delays or complications in processing your forms. Below are additional points to remember for each code:

Code F Additional Notes

• Applicable for transfers where ownership changes entirely.
• Do not select this code if there is any existing lease affecting the property.

Code L Additional Notes

• Includes grants of leases that are new and where there may be financial implications.
• Be prepared to provide further details if variations exist.

Code A Additional Notes

• Ensure you understand any existing lease obligations prior to filling out the form.
• Complete all relevant sections about the lease situation.

Code O Additional Notes

• May involve a variety of interests beyond traditional leases or conveyances.
• Minimal information is required if SDLT is chargeable at 1% or more, making it simpler to complete.

Subsequent Steps After Selection

After selecting a code, you should ensure all relevant sections of the SDLT1 form are completed. Keep these points in mind:

• Review the entire form for clarity and accuracy.
• Provide all necessary documentation that may be required based on your selected code.
• Maintain copies of all forms and documentation for your records.

The correct selection and completion of the SDLT1 form are important for compliance with tax regulations. Understanding what each code signifies and ensuring your answers are accurate can help streamline the process.