Does SDLT apply twice on a same-day sub-sale, and can you also argue the property was not suitable for use as a dwelling?

Introduction

Readers often search for this issue where a property has moved through more than one buyer on the same day, especially where companies are involved and the SDLT paperwork appears confusing. The usual concern is whether HMRC can charge Stamp Duty Land Tax twice, once on the original contract and again on the onward transfer.

A related question sometimes arises where the buyer also wants to argue that the property was not suitable for use as a dwelling at the effective date of the transaction. That can affect whether residential SDLT rates applied at all. The two issues are separate, but they can appear in the same transaction.

In the scenario considered here, Nick’s view was that the same-day onward transfer fell within the sub-sale rules in section 45 Finance Act 2003, so SDLT was charged only once on the ultimate acquisition. He then considered whether a separate argument could be made that the property was not suitable for use as a dwelling.

The Question

A buyer asked for a review of transaction documents relating to a same-day property acquisition structure involving two connected corporate parties. The documents included the purchase contract, transfer paperwork, SDLT material and title information.

The practical questions were:

• Was the SDLT treatment already applied to the transaction correct?
• Did the same-day onward transfer trigger a second SDLT charge?
• Could the buyer also pursue a claim that the property was not suitable for use as a dwelling, based on its condition at the effective date?
• What evidence would HMRC need, and which company should be shown as the correct party for SDLT purposes?

Nick’s Explanation

Nick’s central point was that this was “a same-day sub-sale structure”. He explained that where section 45 Finance Act 2003 applies, sub-sale relief means SDLT is charged once on the ultimate acquisition only.

In anonymised form, his reasoning was:

• the sequence of events showed an original contract followed by an onward transfer on the same day;
• that structure fell within section 45 Finance Act 2003;
• because the onward transfer formed part of a qualifying sub-sale arrangement, there was no separate SDLT charge on the intermediate step;
• if the transfers had happened at different times and did not form part of a qualifying sub-sale, a second SDLT charge could have arisen;
• once the sub-sale analysis was accepted, attention could turn to whether the property was not suitable for use as a dwelling at the effective date.

Nick also identified an administrative point which often matters in practice: HMRC must be dealing with the correct purchaser for SDLT record purposes. In a sub-sale case, that may not be the same entity that ends up holding title after completion. The contractual sequence and the section 45 treatment determine which party is relevant for the SDLT analysis.

The Law

The main provision is section 45 Finance Act 2003. Broadly, it deals with cases where a purchaser under a land contract assigns rights or enters into an onward transaction before completion, so that another person becomes entitled to the property or to call for the conveyance.

Where section 45 applies, the original contract is generally disregarded for SDLT charge purposes and the legislation instead taxes the secondary transaction, meaning the ultimate acquisition. In simple terms, SDLT is not charged twice merely because there is an original contract and an onward transfer within a qualifying sub-sale structure.

The exact outcome depends on the facts, including:

• whether there was a land contract;
• whether there was a transfer of rights or onward sale before completion;
• whether completion took place in a way that engaged the sub-sale rules;
• the timing of the steps; and
• who was entitled to call for the conveyance.

On the separate issue of whether a property is residential, SDLT uses the concept of a building that is used or suitable for use as a dwelling. If, at the effective date of the transaction, the property is not suitable for use as a dwelling, the buyer may argue that non-residential or mixed-use rates should apply instead of residential rates.

That argument is highly fact-sensitive and has become harder to establish. In an uninhabitable or not suitable for use case, the condition threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. The courts have made clear that disrepair, age, or the need for renovation will not by themselves be enough. The property must fail the statutory test at the effective date in a more fundamental way.

Analysis

The first step is to separate the two issues:

1. whether SDLT was charged correctly under the sub-sale rules; and
2. whether the property was in such condition that it was not suitable for use as a dwelling.

On the sub-sale point, the facts described point towards a classic same-day onward transfer analysis.

• There was an original acquisition structure involving one corporate party entering into the initial purchase contract.
• There was then an onward transfer to another corporate party on the same day.
• Nick concluded that these steps formed part of a same-day sub-sale arrangement.

If that is right, section 45 applies. The effect is that the intermediate contractual step is not separately charged in the ordinary way. Instead, SDLT is charged on the ultimate acquisition. That is why Nick said the SDLT position was “correct and paid”.

That conclusion also explains why he noted that, had the transfers occurred at different times and not formed part of a sub-sale, the second transfer would have attracted a separate SDLT charge. Timing and structure matter. A later transfer after the first acquisition has already completed is very different from an onward transfer built into the completion mechanics of the original deal.

The second step is identifying the correct purchaser for HMRC record purposes. In a sub-sale case, the legal and tax analysis may require HMRC to recognise the intermediate contracting party as the relevant purchaser for the SDLT return, even if title ultimately ends up elsewhere. Nick’s draft correspondence to HMRC shows the importance of aligning the authority to act and the SDLT file with the correct entity under the section 45 analysis.

The third step is the “not suitable for use as a dwelling” argument. That issue turns on the property’s actual condition at the effective date of the transaction, not on what works were later carried out and not simply on whether the buyer intended refurbishment.

Relevant evidence usually includes:

• surveyor or contractor reports prepared close to completion;
• dated photographs and videos;
• evidence of missing or failed essential services;
• structural or safety defects;
• local authority or environmental notices, if any;
• completion statements, contract papers and title documents; and
• any evidence showing the condition on the effective date rather than afterwards.

However, the legal threshold is now demanding. Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, a property will not cease to be suitable for use as a dwelling merely because it is run down, dated, in poor repair, or requires substantial works. The question is whether, viewed realistically at the effective date, it was suitable for use as a dwelling at all. Many claims fail because the defects, although serious in commercial terms, do not cross that legal threshold.

So the combined analysis is:

• the same-day onward transfer may well avoid a second SDLT charge under section 45;
• but any attempt to reduce SDLT further by arguing the property was not suitable for use as a dwelling will require strong contemporaneous evidence and must meet a relatively high legal standard.

Outcome

The practical conclusion is that a same-day sub-sale can result in SDLT being charged once on the ultimate acquisition only, rather than twice. On the facts reviewed by Nick, that was the correct SDLT treatment.

A separate claim that the property was not suitable for use as a dwelling may still be explored, but it is not automatic and should not be assumed to succeed. The condition threshold in these cases is now relatively high, especially after Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

Practical Steps

If you are assessing a similar case, the sensible next steps are:

1. Map the transaction sequence carefully. Identify the original contract, any onward transfer, and the exact order and timing of completion steps.
2. Check whether section 45 Finance Act 2003 applies. The key question is whether there was a genuine sub-sale or transfer of rights before completion of the original contract.
3. Confirm which party is the correct purchaser for SDLT purposes. This matters for HMRC correspondence, amendments and authority to act.
4. Collect contemporaneous evidence of the property’s condition at the effective date if a “not suitable for use as a dwelling” argument is being considered.
5. Test that evidence against the current case law, including the higher threshold confirmed in Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.
6. Review the SDLT return, contract papers, transfer documents and title records together rather than in isolation.

Conclusion

Where a property is acquired through a same-day sub-sale structure, section 45 Finance Act 2003 can mean SDLT is payable only on the ultimate acquisition. That does not automatically mean a further reduction is available on the basis that the property was not suitable for use as a dwelling. That separate argument depends on the property’s condition at the effective date and now faces a relatively high threshold in light of Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

Legal References Used

• Finance Act 2003, section 45
• Finance Act 2003, Schedule 11A paragraph 2(2)
• Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799

This page was last updated on 22 March 2026.

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