SDLTM29841 | Linked Transactions – further detail

Normally relief only applies to the purchase of a dwelling, but the relief can apply to transactions which do not consist of the purchase of a dwelling, if such a transaction is linked with the purchase of a dwelling.

Relief can be claimed in respect of such a linked transaction if:

· the main subject matter of the transaction is gardens or grounds in relation to the purchased dwelling, or interests subsisting for the benefit of the purchased dwelling, and

· there are no purchasers in relation to the linked transaction who were not purchasers of the dwelling.

A linked transaction may mean that relief that was due at the time of a transaction ceases to be due because of the occurrence of the later linked transaction. This could happen where either:

· there is a linked transaction, the subject matter of which is not garden, grounds or interests subsisting for the benefit of the purchased dwelling, or

· there is a linked transaction whose consideration made the total relevant consideration for all the linked transactions greater than £500,000.

If the linked transactions occur on the same day then the transactions may all be reported on the same return and relief should only be claimed where it is due, taking into account all of those transactions.

If a later linked transaction happens before the return for the original transaction is submitted to HMRC then all the transactions occurring up until the date of submission should be taken into account in determining the eligibility and amount of relief.

Where a later linked transaction occurs after the original return has been submitted, the usual procedure applies where a later transaction increases the amount of tax due in respect of an earlier transaction. In such cases, a further return will need to be submitted for the original transaction. The further return would need to recalculate the SDLT due based on either the withdrawal of relief and/or an increase in the relevant consideration.

The further return must be made within 30 days of the date of the later transaction and any increase in tax relating to the original transaction must be paid by the same date. The rules for this are at section 81A of FA03.

Further guidance on linked transactions is available in the SDLT Manual at SDLTM50350.