Linked Transactions

Transactions are linked for the purposes of SDLT if they form part of a single scheme, arrangement or series of transactions between the same vendor and purchaser or, in either case, persons connected with them.

If land transactions are treated as linked, they are treated for the purposes of calculating SDLT as one.  The main impact is on the rates of SDLT chargeable e.g. if two residential transactions take place for consideration of £175,000, SDLT would be chargeable at 1% on each transaction resulting in SDLT on each transaction of £1750, £3500 in total.  However, if the transactions are linked, the rate at which SDLT is chargeable will rise to 3% (the combined consideration exceeds the £250,000 threshold).  The resulting SDLT charge will be £10,500 (split between the two transactions).

The “mischief” of the linked transactions rule was to counter the artificial splitting of a vendor’s estate to avoid a full charge to SDLT.  However, the legislation is drafted widely and potentially catches any transactions between the same vendor and purchaser unless it is explicitly clear that there is no interdependence or connection between the two transactions i.e. it is a mere coincidence that the transactions have both taken place.

It is important in any situation where more than one transaction is taking place between the same vendor and purchaser that the linked transaction rules are considered. 

For more information please email jfeaster@edftax.co.uk or call 07526 003021 to speak to John.