Are two flats bought by the same company from the same seller linked transactions for SDLT?

Introduction

Buyers often ask whether two property purchases can be treated separately for Stamp Duty Land Tax (SDLT) if there are separate contracts, separate prices and separate mortgages. This matters because linked transaction treatment can increase the total SDLT payable.

A common example is where a company buys two flats in the same building from the same seller. Even if each flat is sold on its own lease and financed separately, the SDLT rules may still treat the purchases as linked.

The Question

A property investment company plans to buy two leasehold flats in a building that was converted from a house into three flats. The flats are being marketed separately. The buyer will acquire two of them from the same seller, using two separate mortgages and two separate purchase contracts. After completion, the freehold will be held through a separate company in which the flat owners will have shares.

The agreed prices are £555,000 for one flat and £530,000 for the other. The buyer wants to know whether these are separate purchases for SDLT, or whether they are likely to be treated as linked transactions, which would increase the tax.

Nick’s Explanation

Nick’s view was that the transactions are very likely to be linked. In anonymised form, his reasoning was:

“Section 108 of the Finance Act 2003 says transactions are linked if they form part of a single scheme, arrangement or series of transactions between the same vendor and purchaser. Here, the seller is the same and the buyer is the same company in both purchases. That strongly points to linked transaction treatment.”

He also explained that separate contracts and separate mortgages do not by themselves prevent linking:

“The law does not require both flats to be bought under one contract. Even where there are separate contracts and separate mortgages, if the acquisitions are connected in substance and form part of a wider plan, they can still be linked.”

Nick further noted that if the transactions are linked, SDLT is calculated on the combined consideration and then apportioned between the transactions.

The Law

The key provision is section 108 of the Finance Act 2003. It provides that transactions are linked if they form part of a single scheme, arrangement or series of transactions between the same vendor and purchaser, or connected persons.

This is a broad test. It looks at the overall arrangement, not just the paperwork. The fact that there are two contracts does not settle the issue. The question is whether, in substance, the acquisitions are connected and form part of one overall plan.

If transactions are linked, section 55 of the Finance Act 2003 applies the SDLT rates by reference to the total consideration for all linked transactions. The tax is then apportioned across the individual transactions.

Where a company buys residential property, the higher residential rates usually apply. That is because Schedule 4ZA to the Finance Act 2003 imposes the higher rates for additional dwellings, and a company buying dwellings will generally fall within that regime unless a specific relief applies.

Analysis

On these facts, the case for linked transaction treatment is strong.

First, the buyer is the same in both purchases: the same company is acquiring both flats.

Second, the seller is the same in both purchases.

Third, the purchases appear to be part of one overall acquisition plan. The company has identified one building and wants to buy two flats within it as part of the same investment strategy. That usually looks like a single arrangement or a series of transactions.

Fourth, the fact that the flats are separately marketed does not necessarily help. Marketing can be relevant background, but section 108 focuses on whether the actual acquisitions form part of a single scheme, arrangement or series of transactions between the same parties.

Fifth, separate mortgages are not decisive. SDLT linking is not determined by how the purchases are financed. Separate lending arrangements may exist for practical reasons, but the tax analysis still turns on the statutory test.

Sixth, the leasehold structure and the later transfer of the freehold into a company owned by flat owners do not change the main point. The core question remains whether the two flat purchases are sufficiently connected. On the facts given, they are.

In practical terms, if the two purchases are linked, the total consideration is £1,085,000. SDLT is then calculated by reference to that combined figure rather than by treating each flat entirely in isolation. That can produce a higher overall SDLT liability because more of the price falls into higher SDLT bands.

It would usually take unusual facts to displace linked treatment here. For example, if one purchase arose independently at a different time, without any prior plan to buy the second flat, and without any real transactional connection, the analysis might be different. But where both purchases are part of the same intended acquisition from the same seller, HMRC is likely to regard them as linked.

Outcome

The practical answer is that two flats bought by the same company from the same seller, as part of the same investment plan, are very likely to be treated as linked transactions for SDLT.

Separate contracts, separate leases and separate mortgages do not usually prevent that result. On these facts, the safer view is that SDLT should be assessed on the combined consideration under the linked transaction rules.

Practical Steps

If you are assessing a similar purchase, work through the following points:

• Check whether the buyer is the same person or company in each transaction.
• Check whether the seller is the same person or entity in each transaction.
• Ask whether the purchases were planned together or negotiated as part of one overall arrangement.
• Review the timing, heads of terms, correspondence and board minutes to see whether there is one connected acquisition strategy.
• Do not assume that separate contracts or separate mortgages make the transactions unlinked.
• Calculate SDLT on both bases first, but expect HMRC to apply section 108 where the facts show one arrangement or a series of related acquisitions.
• Consider whether any specific SDLT relief applies, but do not assume that relief from linked treatment exists merely because the flats are separate dwellings.

If there is genuine doubt, the key evidence will usually be the underlying facts showing whether the acquisitions were truly independent or were really part of one connected plan.

Conclusion

Where the same company buys two flats from the same seller as part of the same deal or investment plan, the transactions are likely to be linked for SDLT. The legislation looks at substance over form, so separate contracts and separate mortgages do not usually avoid linked transaction treatment.

Legal References Used

• Finance Act 2003, section 108
• Finance Act 2003, section 55
• Finance Act 2003, Schedule 4ZA
• HMRC guidance on linked transactions for SDLT

This page was last updated on 22 March 2026.

See all questions and answers categorized in this sitemap. Or use Google site search below.