HMRC SDLT: Guidance on Completing SDLT1 Form: Effective Date of Transaction Explained

Guidance for Completing SDLT1 Form: Effective Date of Transaction

This section provides guidance on how to correctly fill in question 4 of the SDLT1 form, which pertains to the effective date of a transaction. The date must be entered in the format dd/mm/yyyy, with leading zeros for single-digit days and months. The effective date may be earlier than the completion date if the contract is ‘substantially performed’. This occurs when possession is taken, a substantial amount of consideration is paid, or the first rent payment is made. HMRC considers 90% or more as substantial. The effective date should not be post-dated, and further details are available online.

  • Enter the date in dd/mm/yyyy format with leading zeros for single digits.
  • ‘Substantial performance’ can set the effective date before completion.
  • Possession or payment of 90% or more is considered substantial.
  • Do not post-date the effective date entry.
  • Further information is available on the HMRC website.

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Guidance on Question 4 of Forms SDLT1, SDLT3 and SDLT4

This article provides guidance on filling out question 4 of the SDLT1 form, both in paper format and online. Below you will find important details on how to correctly enter the effective date of the transaction.

Effective Date of Transaction

The effective date must be entered in the format dd/mm/yyyy. If either the day or the month is a single digit (like 5 for the 5th of the month), you should enter it with a leading zero. For example:

  • For 1st January, you would write 01/01/yyyy.
  • For 5th June, it would be 05/06/yyyy.

Understanding Substantial Performance

Sometimes, the contract for a property might be ‘substantially performed’ before the formal completion of the deal. Substantial performance means that significant actions have taken place under the contract. The following situations indicate that substantial performance has occurred:

  • The purchaser, or someone connected to the purchaser, has taken possession of all or most of the property involved in the contract.
  • A large part of the payment has been made—especially important for leases where part of the fee is to be paid upfront.
  • The first rental payment has been made.

HMRC considers a payment of 90% or more as ‘substantial’. This means that if the purchaser has completed 90% or more of their obligations under the contract, you should use this earlier date of substantial performance as the effective date when filling out the form.

Entering the Effective Date

When you fill out the SDLT1 form, it is essential to enter the effective date accurately:

  • Use the date of substantial performance if it occurred before the formal completion date of the property transaction.
  • Do not post-date the effective date on the form; it should reflect the actual date of substantial performance.

Notification Obligations

Once you have completed the transaction, there might be a requirement for you to notify HMRC. This obligation can arise if there was substantial performance prior to the formal completion of the sale.

Further Information

If you want more details about substantial performance, additional guidance can be found at SDLT Guidance SDLTM07700.

Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: Guidance on Completing SDLT1 Form: Effective Date of Transaction Explained

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Written by Land Tax Expert Nick Garner.
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