Where multiple transactions involve the same vendor or purchaser, or a person or company connected with them, the transactions are likely to be ‘linked’ for the purposes of calculating SDLT. In this case, the considerations across the transactions will be combined and applied to the requisite SDLT bands as if they formed a single transaction, with the benefit of only one tax-free band.
Example
A Limited owns two commercial sites which it is advertising as being available to let for £100k and £150k per annum, both for terms of ten years. B Limited is interested in taking leases of both sites and A Limited therefore offers B Limited a 10% concession on the rents in order to incentivise B Limited into taking both. From A Limited’s perspective, this should save costs as they will only be dealing with one party and can seek to harmonise terms across the two sites as much as possible. It is likely that if A Limited had let the sites to two different companies (for the purposes of this example let’s say B Limited and C Limited), A Limited would not have offered the concession and therefore the total SDLT liability across the two sites would have been higher. HMRC, being wise to this, will treat the transactions as ‘linked’ so that, rather than being able to benefit from the 0% band on both leases up to the value of £150,000, which would have resulted in SDLT liabilities of £5,984 and £9,727 respectively, the Net Present Values of both leases will be combined (£748,494+£1,122,741) and applied to the bands to result in an SDLT liability of £17,212. This will then need to be apportioned across the two leases based on their respective values (90:135) for the purposes of the SDLT Return (in this case £6,885 and £10,327).
Surprisingly, despite linked transactions being fairly common, there are no SDLT calculators on the market that can deal with linked transactions, until now. POROS’ New Linked Transactions calculator takes the hassle out of calculating a tenant or purchaser’s SDLT liability and even does the apportionment of the overall liability across the transactions to facilitate the completion of the SDLT Return.
POROS’ New Linked Transactions Calculator will require you to input:
- Whether the transactions involve freehold or leasehold properties
- The consideration or Net Present Value for each property/lease