Linked Transactions – How Do They Work?
When multiple property purchases involve the same seller and buyer they may be classed a linked transaction for SDLT purposes. In this article we will explore what exactly makes a linked transaction.
What makes a linked transaction?
A transaction will be considered as linked by HMRC if any of the following conditions are met:
- There are multiple transactions.
- The transactions are part of a series of transactions, a scheme or a single arrangement.
- The transactions involve the same people or people connected to them.
A connected person could be a relative or business partner (including companies or groups of companies) if the transaction is by or for a business.
What are the different types of linked transactions?
There are two general categories for classifying linked transactions.single agreement transactions and transactions in a series.
Single agreement transactions
A transaction would be a single agreement transaction if for example you purchase a property but a relative purchases the connecting land both being sold by the seller in the same sale. The SDLT rate would be charged on the total of the two transactions.
Transactions in a series
A transaction would be classed as part of a series if you agree a deal on property if you purchase more from the same seller, for example if you buy one house and then purchase another house for a discounted rate as a result of purchasing the first house.
This would still be a linked transaction even if they take place at different times and are documented separately, this also potentially means you would have to pay more SDLT on the first house purchased.
Not all transactions are linked
Just because multiple purchases happen between the same buyer and seller it doesn’t mean they are linked transactions. If there was no prior arrangement or special deals in place or other connections before purchasing properties then they will be considered separate transactions.
What are the current SDLT rates?
You can find out more information regarding the current 2022 rates of SDLT in our article here.
Get help with SDLT
Stamp Duty Land Tax is confusing and has many different aspects to consider when making a purchase. The team at Cap Ex Tax are experts in tax and are here to help you so get in touch with them today.