Guidance on Land Conveyance Tax Rules Under Section 44A FA 2003

When SDLT or LTT applies to a conveyance to a third party under section 44A

Section 44A covers cases where land is sold under one contract but transferred either to the buyer or to another person at the buyer’s direction. For Welsh transactions around the start of Land Transaction Tax on 1 April 2018, the tax result depends mainly on the date of the first contract, whether it was substantially performed by 17 December 2014, and whether any exclusions in section 16(6) of the Wales Act 2014 apply.

• If the first contract was substantially performed on or before 17 December 2014, the relevant section 44A obligation and any B-to-C contract stay within SDLT, even if the effective date is on or after 1 April 2018.
• If the first contract was made on or before 17 December 2014 but was not substantially performed, SDLT can still apply, unless an exclusion in section 16(6) of the Wales Act 2014 applies, in which case LTT applies instead.
• If the first contract was made after 17 December 2014 and the effective date is on or after 1 April 2018, the B-to-C contract is not subject to SDLT and falls within LTT.
• You cannot decide the tax position just by looking at the final transfer date; you must identify the first contract, its date, and whether it was substantially performed.
• Where LTT applies, a return must be made to the Welsh Revenue Authority.
• In practice, these cases can be difficult because the first contract date, substantial performance date, and effective date may all differ, and the section 16(6) exclusions must be checked separately.

Scroll down for the full analysis.

Conveyance to a third party: when SDLT or LTT applies under section 44A FA 2003

This page explains how the transitional rules work where land is sold under one contract but transferred either to the buyer or to someone else at that buyer’s direction. The issue matters because, for Welsh transactions around the start of Land Transaction Tax on 1 April 2018, the tax treatment can fall under either SDLT or LTT depending mainly on when the first contract was made, whether it was substantially performed, and whether any statutory exclusions apply.

What this rule is about

Section 44A of the Finance Act 2003 deals with a particular transaction structure. There is a first contract under which one party, referred to here as A, agrees to convey a chargeable interest in land. A does so at the request of another party, B. The land may then be conveyed either to B or to a third person, C, who is not a party to the first contract.

This kind of structure can arise where the original buyer directs the seller to transfer the property on to another person. The tax question is not just who ends up with the land. It is also which linked obligation or contract is treated as taxable, and whether the relevant tax is SDLT or LTT.

The source material is concerned with the transition from SDLT to LTT in Wales. It does not rewrite section 44A itself. Instead, it explains when transactions within section 44A remain within SDLT and when they move into LTT from 1 April 2018.

What the official source says

The official material sets out three timing rules.

First, if the first contract was substantially performed on or before 17 December 2014, then both:

• an obligation of the kind mentioned in section 44A(6)(b), and
• a contract between B and C of the kind mentioned in section 44A(7),

remain subject to SDLT, even if the effective date of the transaction is on or after 1 April 2018.

Second, if the first contract was entered into on or before 17 December 2014 but was not substantially performed, the position is more conditional. In that case, the section 44A(6)(b) obligation and the section 44A(7) contract between B and C are subject to SDLT if their effective date is on or after 1 April 2018 and none of the exclusions in section 16(6) of the Wales Act 2014 applies. If one of those exclusions does apply, the transaction falls into LTT instead.

Third, if the first contract was entered into after 17 December 2014, then the section 44A(6)(b) obligation and the section 44A(7) contract are not subject to SDLT if their effective date is on or after 1 April 2018. In that case, the contract between B and C is subject to LTT and a return must be made to the Welsh Revenue Authority.

What this means in practice

The practical point is that you cannot decide the tax simply by looking at the date when the transfer to the final recipient takes place. You must identify the first contract and place it on the correct side of 17 December 2014. You must also ask whether that first contract was substantially performed by that date.

For older arrangements, especially those already substantially performed on or before 17 December 2014, the source material preserves SDLT treatment even where the later effective date falls after LTT began on 1 April 2018.

For contracts entered into on or before 17 December 2014 but not substantially performed by then, the result depends on whether any of the exclusions in section 16(6) of the Wales Act 2014 apply. The source material does not set those exclusions out in full, so they need to be checked separately.

For contracts entered into after 17 December 2014, the later B-to-C contract falls into LTT rather than SDLT if the effective date is on or after 1 April 2018. In those cases, the source expressly says that an LTT return must be made to the WRA.

This is therefore a transitional rule driven by dates and statutory gateways, not by broad commercial substance alone.

How to analyse it

A sensible way to analyse a case is to work through these questions in order.

• Is there a section 44A arrangement at all? In other words, is there a first contract under which A is to convey the land at B’s request, either to B or to a third party C?
• What is the date of the first contract?
• Was that first contract substantially performed on or before 17 December 2014?
• What is the effective date of the relevant obligation or B-to-C contract?
• If the first contract was entered into on or before 17 December 2014 but not substantially performed, do any of the exclusions in section 16(6) of the Wales Act 2014 apply?
• If the result is LTT, has the need for a return to WRA been identified?

It is important not to collapse these questions into one. The date the first contract was entered into, the date of substantial performance, and the effective date of the later transaction may all be different, and the tax outcome depends on keeping those concepts separate.

Example

Illustration: A agrees to sell Welsh land under a first contract to B. Later, at B’s request, the land is to be conveyed to C instead. If the first contract was entered into after 17 December 2014, and the relevant effective date is after 1 April 2018, the source material says that the B-to-C contract is not subject to SDLT. It falls within LTT, and a return must be made to WRA.

By contrast, if the first contract had been substantially performed on or before 17 December 2014, the source material indicates that the relevant section 44A obligation and B-to-C contract would remain within SDLT, even if the effective date was after 1 April 2018.

Why this can be difficult in practice

The main difficulty is that section 44A transactions involve more than one legal step, and the transitional rule attaches significance to different dates for different purposes. It is easy to focus on the final conveyance and miss the importance of the first contract.

A second difficulty is the role of substantial performance. The source material assumes that this has already been identified, but in practice that can itself require careful legal analysis.

A third difficulty is the reference to the exclusions in section 16(6) of the Wales Act 2014. The source says those exclusions can switch a case from SDLT to LTT where the first contract was entered into on or before 17 December 2014 but not substantially performed. Because the exclusions are not reproduced in the source extract, they need to be checked directly rather than assumed.

Finally, the source distinguishes carefully between the section 44A obligation and the contract between B and C. In a real transaction, the documents and sequence of events need to be reviewed closely to identify which provision is engaged and what the effective date is for that particular transaction.

Key takeaways

• In section 44A cases, the date and status of the first contract are central to whether SDLT or LTT applies.
• If the first contract was substantially performed on or before 17 December 2014, the relevant transactions remain within SDLT even if the effective date is on or after 1 April 2018.
• If the first contract was entered into after 17 December 2014 and the effective date is on or after 1 April 2018, the B-to-C contract falls within LTT and a return must be made to WRA.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guidance on Land Conveyance Tax Rules Under Section 44A FA 2003

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