Part 4U.K.Stamp duty land tax

Modifications etc. (not altering text)

Land transactionsU.K.

45Contract and conveyance: effect of transfer of rightsU.K.

(1)This section applies where—

(a)a contract for a land transaction (“the original contract”) is entered into under which the transaction is to be completed by a conveyance, F1...

(b)there is an assignment, subsale or other transaction (relating to the whole or part of the subject-matter of the original contract) as a result of which a person other than the original purchaser becomes entitled to call for a conveyance to him [F2, and

(c)paragraph 12B of Schedule 17A (assignment of agreement for lease) does not apply.]

References in the following provisions of this section to a transfer of rights are to any such assignment, subsale or other transaction [F3, and references to the transferor and the transferee shall be read accordingly].

[F4(1A)The reference in subsection (1)(b) to an assignment, subsale or other transaction does not include the grant or assignment of an option [F5or an agreement for the future grant or assignment of an option].]

(2)The transferee is not regarded as entering into a land transaction by reason of the transfer of rights, but section 44 (contract and conveyance) has effect in accordance with the following provisions of this section.

(3)That section applies as if there were a contract for a land transaction (a “secondary contract”) under which—

(a)the transferee is the purchaser, and

(b)the consideration for the transaction is—

(i)so much of the consideration under the original contract as is referable to the subject-matter of the transfer of rights and is to be given (directly or indirectly) by the transferee or a person connected with him, and

(ii)the consideration given for the transfer of rights.

The substantial performance or completion of the original contract at the same time as, and in connection with, the substantial performance or completion of the secondary contract shall be disregarded [F6except [F7 in a case excluded by subsection (3A) or] in a case where the secondary contract gives rise to a transaction that is exempt from charge by virtue of [F8any of sections 71A to 73 (which relate to alternative property finance).]]

[F9(3A)A case is excluded by this subsection from the second sentence of subsection (3) if—

(a)the secondary contract is substantially performed at the same time as, and in connection with, the substantial performance or completion of the original contract but is not completed at that time (“the relevant time”),

(b)the original purchaser or a person connected with the original purchaser is in possession of the whole, or substantially the whole, of the subject-matter of the transfer of rights at any time after the relevant time, and

(c)having regard to all the circumstances, it would be reasonable to conclude that the obtaining of a tax advantage for the original purchaser was the main purpose, or one of the main purposes, of the original purchaser in entering into the transfer of rights.

(3B)In subsection (3A)—

  • “possession” has the same meaning as in section 44(5)(a);

  • “tax advantage” means—

    (a)

    a relief from tax or increased relief from tax,

    (b)

    a repayment of tax or increased repayment of tax, or

    (c)

    the avoidance or reduction of a charge to tax.

(3C)Nothing in subsection (3A) or (3B) affects the breadth of the application of sections 75A to 75C.]

(4)Where there are successive transfers of rights, subsection (3) has effect in relation to each of them.

The substantial performance or completion of the secondary contract arising from an earlier transfer of rights at the same time as, and in connection with, the substantial performance or completion of the secondary contract arising from a subsequent transfer of rights shall be disregarded [F10except in a case excluded by subsection (4A)].

[F11(4A)Subsection (3A) applies for the purposes of subsection (4) as if—

(a)the reference to subsection (3) were a reference to subsection (4),

(b)a reference to the original contract were a reference to the secondary contract arising from the earlier transfer of rights,

(c)a reference to the original purchaser were a reference to the transferee under the earlier transfer of rights, and

(d)a reference to the transfer of rights were a reference to the subsequent transfer of rights.]

[F12(5)Where a transfer of rights relates to part only of the subject-matter of the original contract (“the relevant part”)—

(a)subsection (8)(b) of section 44 (restriction of charge to tax on subsequent conveyance) has effect as if the reference to the amount of tax chargeable on that contract were a reference to an appropriate proportion of that amount, and

(b)a reference in the second sentence of subsection (3) above [F13or in subsection (3A) above] to the original contract, or a reference in subsection (4) [F14or (4A)] above to the secondary contract arising from an earlier transfer of rights, is to that contract so far as relating to the relevant part (and that contract so far as not relating to the relevant part shall be treated as a separate contract).]

[F15(5A)In relation to a land transaction treated as taking place by virtue of subsection (3)—

(a)references in Schedule 7 (group relief) to the vendor shall be read as references to the vendor under the original contract;

(b)other references in this Part to the vendor shall be read, where the context permits, as referring to either the vendor under the original contract or the transferor.]

(6)[F16Section 1122 of the Corporation Tax Act 2010] (connected persons) applies for the purposes of subsection (3)(b)(i).

(7)In this section “contract” includes any agreement and “conveyance” includes any instrument.

Textual Amendments

F1Word in s. 45(1) repealed (with effect in accordance with Sch. 39 para. 13 of the amending Act) by Finance Act 2004 (c. 12), Sch. 42 Pt. 4(2)

F2S. 45(1)(c) and word inserted (with effect in accordance with Sch. 39 para. 13(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 39 para. 5(2)(a)

F3Words in s. 45(1) inserted (with effect in accordance with Sch. 39 para. 13(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 39 para. 5(2)(b)

F4S. 45(1A) inserted (with effect in accordance with s. 212(2) of the amending Act) by Finance Act 2012 (c. 14), s. 212(1A)

F5Words in s. 45(1A) inserted (with effect in accordance with s. 194(1)(a) of the amending Act) by Finance Act 2013 (c. 29), s. 194(2)

F6Words in s. 45(3) inserted (with effect in accordance with Sch. 10 para. 16(5)-(9) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 10 para. 2

F7Words in s. 45(3) inserted (with effect in accordance with s. 194(1)(b) of the amending Act) by Finance Act 2013 (c. 29), s. 194(3)

F8Words in s. 45(3) substituted (with effect in accordance with Sch. 21 para. 5 of the amending Act) by Finance Act 2011 (c. 11), Sch. 21 para. 2

F9S. 45(3A)-(3C) inserted (with effect in accordance with s. 194(1)(b) of the amending Act) by Finance Act 2013 (c. 29), s. 194(4)

F10Words in s. 45(4) inserted (with effect in accordance with s. 194(1)(b) of the amending Act) by Finance Act 2013 (c. 29), s. 194(5)

F11S. 45(4A) inserted (with effect in accordance with s. 194(1)(b) of the amending Act) by Finance Act 2013 (c. 29), s. 194(6)

F12S. 45(5) substituted (with effect in accordance with Sch. 39 para. 13(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 39 para. 5(3)

F13Words in s. 45(5)(b) inserted (with effect in accordance with s. 194(1)(b) of the amending Act) by Finance Act 2013 (c. 29), s. 194(7)(a)

F14Words in s. 45(5)(b) inserted (with effect in accordance with s. 194(1)(b) of the amending Act) by Finance Act 2013 (c. 29), s. 194(7)(b)

F15S. 45(5A) inserted (with effect in accordance with Sch. 39 para. 13(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 39 para. 5(4)

F16Words in s. 45(6) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 402 (with Sch. 2)

Commencement Information

I1Pt. 4 wholly in force at Royal Assent subject to Sch. 19, see s. 124, Sch. 19 para. 1(1)