How is SDLT calculated when a buyer purchases the remaining share of a home in a later linked transaction?

Introduction

People often ask how Stamp Duty Land Tax (SDLT) works where a home is acquired in stages rather than in one purchase. A common concern is whether HMRC will charge tax on the full combined price at current rates, or only on the later amount being paid.

This issue usually arises where part of a property was bought earlier, and the remaining share is being bought later by the same person from the same owner. The SDLT rules on linked transactions can be difficult to follow, especially where the first purchase took place during a temporary SDLT holiday.

The Question

A buyer acquired an 80% interest in a freehold dwelling in 2021 for £500,000. At that time, the dwelling was intended to be the buyer’s only residence, the buyer did not own another dwelling, and no SDLT was payable because the transaction fell within the temporary COVID-era SDLT nil-rate threshold.

The buyer now plans to acquire the remaining 20% interest in 2025 for £145,000 from the same family owner. The question is whether the SDLT due on the second transaction is:

• £19,750, based on the total of the linked transactions at current rates, or
• £7,250, being 5% of the amount above the earlier £500,000 level.

The related practical point is how the SDLT return should be completed where the second purchase is linked to the first.

Nick’s Explanation

Nick’s view was that the SDLT liability on the later purchase should be £7,250, not £19,750.

In anonymised form, his reasoning was that the two purchases are linked, so the total consideration of £645,000 must be taken into account when identifying the rate structure. However, that does not mean the buyer pays £19,750 again on the later return. Instead, the later transaction bears the extra SDLT generated by bringing the total linked consideration up to £645,000.

Nick explained the point in substance as follows: the first transaction took place during the SDLT holiday, when £500,000 fell within the nil-rate band, so no SDLT was due then. When the second linked transaction takes place in 2025, the linked total becomes £645,000. Under the linked transaction rules, SDLT is worked out by reference to the total consideration, but credit is effectively given for the tax already chargeable on the earlier linked transaction. As the earlier amount produced no SDLT at the time, the additional charge on the second transaction is £7,250.

The Law

SDLT is charged under the Finance Act 2003. For residential property, the tax is generally calculated by applying the residential rate bands in force on the effective date of the transaction.

Where transactions are “linked transactions”, special rules apply. Broadly, transactions are linked if they form part of a single scheme, arrangement or series of transactions between the same buyer and seller, or between persons connected with them in the relevant sense. The effect of the linked transaction rules is that the consideration for the linked transactions is aggregated when determining the rate of SDLT.

The key point is that linked transactions do not simply cause the full SDLT on the aggregate amount to be charged afresh on every later transaction. Instead, the later transaction is charged by reference to the total linked consideration, with account taken of tax already chargeable on the earlier linked transactions.

For residential purchases in England, the standard SDLT rates in force from 23 September 2022 are:

• 0% on the portion up to £250,000
• 5% on the portion from £250,001 to £925,000
• 10% on the portion from £925,001 to £1.5 million
• 12% above £1.5 million

Different temporary thresholds applied during parts of the COVID period, including the higher nil-rate threshold that applied to many transactions in 2021.

Analysis

The calculation can be broken down into four steps.

First, identify whether the transactions are linked.

On these facts, the same buyer is acquiring interests in the same dwelling from the same owner in stages. In general terms, that is the kind of arrangement that is normally treated as linked for SDLT purposes.

Second, identify the total linked consideration.

The first purchase price was £500,000 and the second is £145,000. The total linked consideration is therefore £645,000.

Third, calculate the SDLT on the total linked consideration using the rates relevant to the later transaction.

Using the ordinary residential rates in force in January 2025:

• 0% on the first £250,000 = £0
• 5% on the remaining £395,000 = £19,750

So the SDLT attributable to the total linked consideration is £19,750.

Fourth, deduct the SDLT already chargeable on the earlier linked transaction.

The earlier transaction took place during the SDLT holiday. On a £500,000 residential purchase at that time, the SDLT charge was £0. That means there is no earlier SDLT amount to deduct other than nil.

However, the practical tax due on the second transaction is not simply a fresh £19,750 on top of the first purchase. The second return reflects the additional SDLT arising because the linked total has now increased from £500,000 to £645,000.

Another way to see this is to compare:

• SDLT on linked total of £645,000 at current rates = £19,750
• SDLT on £500,000 = £12,500 at current rates, but the actual earlier transaction was taxed under the temporary holiday rules and produced £0 at the time

For the purpose of the later linked transaction computation, the additional slice created by the further £145,000 falls wholly into the 5% band. That produces £7,250.

So, on the facts given, the practical SDLT payable on the second acquisition is £7,250.

As to the SDLT return entries in general terms:

• the effective date should be the actual effective date of the second transaction;
• the chargeable consideration for the transaction being notified is the amount paid for that second acquisition;
• the transaction should be identified as linked if the statutory test is met; and
• the total consideration for all linked transactions should include both purchases.

The amount of tax entered should reflect the SDLT due on the second notifiable transaction after applying the linked transaction rules, which on these facts points to £7,250.

Outcome

On the scenario described, the likely SDLT due on the second purchase is £7,250.

The £19,750 figure represents the SDLT on the full linked total of £645,000 at current residential rates. It does not mean that £19,750 is payable again on the second transaction as a standalone amount.

Practical Steps

If you are dealing with a staged purchase of a home, it is sensible to:

• confirm whether the transactions are legally linked under Finance Act 2003;
• check the exact effective date of each transaction;
• identify the SDLT rates and thresholds in force on each relevant date;
• confirm whether any reliefs or temporary thresholds applied to the earlier transaction;
• complete the later SDLT return using the actual consideration for that transaction and the total for all linked transactions; and
• keep a clear calculation showing how the tax due on the later transaction has been derived.

Where the transaction is unusual, intra-family, or being completed in stages, it is wise to have the SDLT calculation checked carefully before filing the return.

Conclusion

Where a buyer acquires a home in stages, the linked transaction rules can increase the rate applied to the later purchase, but they do not usually mean the whole aggregate SDLT is charged again from scratch. On the facts outlined here, the later acquisition of the remaining share produces an SDLT liability of £7,250.

Legal References Used

• Finance Act 2003
• Finance Act 2003, provisions on linked transactions
• Finance Act 2003, residential SDLT rate provisions
• Temporary SDLT nil-rate threshold changes introduced during the COVID period

This page was last updated on 22 March 2026.

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