Read the original guidance here:
HMRC SDLT: Guidance for Completing SDLT Forms: Transaction Descriptions and Codes Explained

Guidance on Completing Forms SDLT1, SDLT3, and SDLT4 – Question 2 for SDLT1

This section covers important details regarding question 2 on paper form SDLT1 or the online version 1.0. When answering this question, you must choose one of four options: F, L, A, or O. Each of these codes corresponds to a different type of transaction. Below is an outline of each option and what it represents.

Options for Question 2

• F – Conveyance/Transfer

This option applies to the transfer of freehold property in England and Northern Ireland. It includes all types of freehold transfers, whether legal or equitable and even those involving a commonhold. However, if the ownership of the land you are transferring is subject to a lease, you should use code A instead.

• L – Grant of Lease

Code L is designated for the grant of a new lease. This includes various scenarios:

• Issuing a new lease, such as an overriding lease.
• Replacing an expired lease with a new or replacement lease.
• Variations of existing leases, with some exceptions noted below.

Variations that increase rent or entail a surrender and re-grant are considered equivalent to granting a new lease and should be labelled under code L. If there are tax implications on the rental amount or premium for a new lease, code L must be used. When using paper form SDLT1, you will need to complete questions 16 to 25. If you are using the online version, you will be asked the relevant questions automatically.

For more detailed information on lease variations, refer to SDLTM15010.

• A – Any Other Transaction Involving a Lease

Code A covers all transactions that involve a lease but do not fit into the other categories. This includes:

• The assignment of an existing lease.
• Transferring a freehold property that is subject to one or more leases.
• Surrendering a lease by the tenant.
• Buying back a freehold or leasehold reversion by the tenant.

When you select code A, it’s crucial to provide additional details in the section titled ‘About Leases.’ You should answer questions 16 to 21, but not questions 22 to 25 (or 1.22 to 1.25 online). The online form will prompt you for the necessary questions.

• O – Other Transactions

Code O is used for interests not captured under codes A, F, or L. Examples of this include:

• Acquiring an easement or servitude.
• Gaining rights to sport on a property.
• Changing a lease to reduce the rent payable.
• Altering a lease to shorten its duration, particularly if a return is expected from the lessor.

If your transaction falls under code O and requires SDLT to be reported, you only need to complete the SDLT1 form. You are required to notify the authorities if SDLT is set at 1% or more. For all transactions under code O, leave questions 16 to 25 (or 1.16 to 1.25 online) blank.

Important Considerations

Each code has specific requirements and scenarios in which it should be applied. Before selecting an option, it’s vital to fully understand your transaction and its implications for Stamp Duty Land Tax (SDLT).

The choice of codes determines how the transaction will be treated for tax purposes. Understand the context in which you are operating—whether you are transferring ownership, assigning a lease, or engaging in some other kind of property transaction. The codes will guide your tax obligation and reporting process.

Examples of Each Code

1. Example for Code F:

   Consider a scenario where Sarah decides to buy a freehold property in London. Since this is a direct transfer of ownership, she would use code F.

2. Example for Code L:

   Suppose James is leasing a shop from a landlord. If the landlord issues a new lease that includes a higher rent than before, James must select code L to signify this new arrangement.

3. Example for Code A:

   Imagine if Emma acquires an existing lease for an apartment. In this case, she must use code A because it is a lease transaction without a new lease being created.

4. Example for Code O:

   If Tom negotiates rights to fish in a private lake, he would report this transaction under code O, as it does not fit into any of the other categories.

Completing the SDLT1 Form

When completing the SDLT1 form, the choice of code is a primary step. Next, you must ensure that you’ve filled out the questions specific to the code selected. This process is essential for accuracy in reporting and tax obligations.

If you are unsure about which code to select, it is beneficial to consult professional advice or further resources. This careful selection can help prevent future issues with tax compliance.

Understand that there are additional questions associated with each code that require your attention. Make sure you answer all relevant questions pertaining to your selected code—this will ensure your form is completed correctly and you meet your legal obligations.

Remember that accurate reporting is critical. Errors in your choice of code or omitted information can lead to complications and potential tax liabilities in the future. Always double-check your form before submission to ensure compliance with HMRC guidelines.