Finance Act 2003, Schedule 4, paragraph 5

Exchanges

SCHEDULE 4 Stamp duty land tax: chargeable consideration

5 (1) This paragraph applies to determine the chargeable consideration where one or more land transactions are entered into by a person as purchaser (alone or jointly) wholly or partly in consideration of one or more other land transactions being entered into by him (alone or jointly) as vendor.

(2) In this paragraph—

(a) “relevant transaction” means any of those transactions, and

(b) “relevant acquisition” means a relevant transaction entered into as purchaser and “relevant disposal” means a relevant transaction entered into as vendor.

(3) The following rules apply if the subject-matter of any of the relevant transactions is a major interest in land—

(a) where a single relevant acquisition is made, the chargeable consideration for the acquisition is—

[F588 (i) the amount determined under sub-paragraph (3A) in respect of the acquisition, or

(ii) if greater, the amount which would be the chargeable consideration for the acquisition ignoring paragraph 5;F588]

(b) where two or more relevant acquisitions are made, the chargeable consideration for each relevant acquisition is—

[F589 (i) the amount determined under sub-paragraph (3A) in respect of that acquisition, or

(ii) if greater, the amount which would be the chargeable consideration for that acquisition ignoring paragraph 5;F589]

[F590 (3A) The amount mentioned in sub-paragraph (3)(a)(i) and (b)(i) is—

(a) the market value of the subject-matter of the acquisition, and

(b) if the acquisition is the grant of a lease at a rent, that rent.F590]

(4) The following rules apply if the subject-matter of none of the relevant transactions is a major interest in land—

(a) where a single relevant acquisition is made in consideration of one or more relevant disposals, the chargeable consideration for the acquisition is the amount or value of any chargeable consideration other than the disposal or disposals that is given for the acquisition;

(b) where two or more relevant acquisitions are made in consideration of one or more relevant disposals, the chargeable consideration for each relevant acquisition is the appropriate proportion of the amount or value of any chargeable consideration other than the disposal or disposals that is given for the acquisitions.

(5) For the purposes of sub-paragraph (4)(b) the appropriate proportion is—

where—

MV is the market value of the subject-matter of the acquisition for which the chargeable consideration is being determined, and

TMV is the total market value of the subject-matter of all the relevant acquisitions.

(6) This paragraph has effect subject to—

  • F591 paragraph 6 of this Schedule (partition etc: disregard of existing interest), ...

  • F592 ...

  • F591 ...

[F593 (7) This paragraph does not apply in a case to which paragraph 17 applies.F593]

Definitions used in Schedule 4, paragraph 5 7

vendor

(b) paragraph 8(1) (meaning of “vendor” where the transferee is the assignee under an assignment of rights) would apply but for paragraph 8(2) (exclusion of cases where the original contract is itself a free-standing transfer).

Defined in Sch.2A para.10(1) · see it in the full Act
the vendor

(4) The general rule is that in relation to the relevant land transaction references in this Part of this Act to “the vendor” are to be read as references to the vendor or (as the case may be) transferor under the first appropriate transaction (but see sub-paragraph (5)).

Defined in Sch.2A para.10(4) · see it in the full Act
the acquisition

(b) with the substitution in subsection (5)(b) for “the acquisition” of “the day appointed under paragraph 3(2) of Schedule 22 to the Finance Act 2003” .

Defined in Sch.22 para.3(3) · see it in the full Act
market value

(5) Section 118 (meaning of “market value”) does not apply to this paragraph.

Defined in Sch.9 para.7(5) · see it in the full Act

(2) This is subject to paragraphs 7(7) and 17(7) of Schedule 7A (which define “market value” for certain purposes of PAIF seeding relief and dfnco-ownership scheme seeding relief).

Defined in s.118(2) · see it in the full Act

(5) Section 118 (meaning of “market value”) does not apply in relation to the reference in sub-paragraph (2)(e) above to the market value of the dwelling.

Defined in Sch.9 para.2(5) · see it in the full Act

(4) Section 118 (meaning of “market value”) does not apply in relation to the references in this paragraph to the market value of the dwelling.

Defined in Sch.9 para.4A(4) · see it in the full Act
lease

5 In paragraphs 3 and 4 “lease” means any arrangements that provide for a ship to be leased or otherwise made available by one person to another.

Defined in Sch.32 para.5 · see it in the full Act
appropriate proportion

(6) In sub-paragraphs (2) and (5), an “appropriate proportion” means an appropriate proportion having regard to the extent to which the subject-matter of the relevant transaction was an interest in or over land other than the disqualifying dwelling.

Defined in Sch.7A para.18(6) · see it in the full Act

(10) In sub-paragraphs (5) and (6) “appropriate proportion” means an appropriate proportion having regard to—

(a) what was acquired by C under the relevant transaction and what is held by C at the time of the disqualifying event, and

(b) the extent to which what is held by C at that time becomes used or held for purposes other than qualifying charitable purposes.

Defined in Sch.8 para.3B(10) · see it in the full Act

(6) In sub-paragraphs (3) and (5) an “appropriate proportion” means an appropriate proportion having regard to the subject-matter of the relevant transaction and what is held by the property AIF at the time when the portfolio test is not met.

Defined in Sch.7A para.6(6) · see it in the full Act

(6) In sub-paragraphs (2) and (5), an “appropriate proportion” means an appropriate proportion having regard to the extent to which the subject-matter of the relevant transaction was an interest in or over land other than the disqualifying dwelling.

Defined in Sch.7A para.8(6) · see it in the full Act

(4) In sub-paragraphs (1) and (3) an “appropriate proportion” means an appropriate proportion having regard to the subject-matter of the relevant transaction and what is held by the purchaser at the time it ceases to be a property AIF.

Defined in Sch.7A para.5(4) · see it in the full Act

(4) In sub-paragraphs (1) and (3) an “appropriate proportion” means an appropriate proportion having regard to the subject-matter of the relevant transaction and what is held by the purchaser at the time it ceases to be a co-ownership ... contractual scheme.

Defined in Sch.7A para.13(4) · see it in the full Act

(4) In sub-paragraphs (1) and (2) an “appropriate proportion” means an appropriate proportion having regard to—

(a) what was acquired by the purchaser under the relevant transaction and what is held by the purchaser at the time of the disqualifying event, and

(b) the extent to which what is held by the purchaser at that time becomes used or held for purposes other than qualifying charitable purposes.

Defined in Sch.8 para.2(4) · see it in the full Act

(6) In sub-paragraphs (3) and (5) an “appropriate proportion” means an appropriate proportion having regard to the subject-matter of the relevant transaction and what is held by the scheme at the time when the portfolio test is not met.

Defined in Sch.7A para.16(6) · see it in the full Act

(4) In sub-paragraphs (1) and (3) an “appropriate proportion” means an appropriate proportion having regard to the subject-matter of the relevant transaction and what is held by the scheme at the time when the genuine diversity of ownership condition is not met.

Defined in Sch.7A para.14(4) · see it in the full Act
an appropriate proportion

(4) In sub-paragraphs (1), (2) and (3) “an appropriate proportion” means an appropriate proportion having regard to the subject-matter of the relevant transaction and what is held at the relevant time by the acquiring company or, as the case may be, by that company and any relevant associated companies.

Defined in Sch.7 para.11(4) · see it in the full Act

(3) In sub-paragraphs (1) and (2) “an appropriate proportion” means an appropriate proportion having regard to the subject matter of the relevant transaction and what is held at the relevant time by the transferee company or, as the case may be, by that company and its relevant associated companies.

Defined in Sch.7 para.3(3) · see it in the full Act

(3) In sub-paragraphs (1) and (2) “an appropriate proportion” means an appropriate proportion having regard to the subject-matter of the relevant transaction and what is held at the relevant time by the acquiring company or, as the case may be, by that company and any relevant associated companies.

Defined in Sch.7 para.9(3) · see it in the full Act

Cases considering Schedule 4, paragraph 5 3

The Commissioners for HMRC v LG Park HT1 Limited & Ors

[2023] EWCA Civ 1193 · 17 October 2023

Applies the exchange exception under which SDLT is charged by reference to the market value of the interest acquired. Whether the transaction was an exchange remained an issue for the FTT. (see paras [10], [49]-[50])

Michael Brown & Anor v The Commissioners for His Majesty’s Revenue and Customs

[2022] UKUT 298 (TCC) · 15 November 2022Interprets

Used as an illustration that SDLT can arise where reciprocal transfers are completed without an antecedent enforceable contract. It supported the rejection of a contract-only meaning of consideration (see para [49]).

LG Park HT1 Limited & Ors. v The Commissioners for HMRC

[2022] UKUT 178 (TCC) · 7 July 2022

The exchange provisions formed part of the SDLT context. HMRC had accepted exchange treatment before issuing the closure notices, supporting the conclusion that valuation was the central issue raised by those notices. (see paras [47]-[48])

What each judgment says about Schedule 4, paragraph 5 is in the case-law panel in the full Act.

Amendments and notes

6 notes from legislation.gov.uk

Amendments

  1. F588Sch. 4 para. 5(3)(a)(i)(ii) substituted (with effect in accordance with Sch. 21 para. 5 of the amending Act) by Finance Act 2011 (c. 11), Sch. 21 para. 4(2)(a)
  2. F589Sch. 4 para. 5(3)(b)(i)(ii) substituted (with effect in accordance with Sch. 21 para. 5 of the amending Act) by Finance Act 2011 (c. 11), Sch. 21 para. 4(2)(b)
  3. F590Sch. 4 para. 5(3A) inserted (with effect in accordance with Sch. 21 para. 5 of the amending Act) by Finance Act 2011 (c. 11), Sch. 21 para. 4(3)
  4. F591Words in Sch. 4 para. 5(6) repealed (with effect in accordance with Sch. 39 para. 26 of the amending Act) by Finance Act 2004 (c. 12), Sch. 42 Pt. 4(2) (which amending provision re-enacts, subject to certain changes, a corresponding amendment made by the now revoked Stamp Duty and Stamp Duty Land Tax (Variation of the Finance Act 2003) (No. 2) Regulations 2003 (S.I. 2003/2816), see Sch. 39 para. 14)
  5. F592Sch. 4 para. 5(6) entry omitted (7.4.2004) by virtue of The Stamp Duty Land Tax (Amendment of Part 4 of the Finance Act 2003) Regulations 2004 (S.I. 2004/1069), regs. 1, 4(2)(a)
  6. F593Sch. 4 para. 5(7) added (7.4.2004) by The Stamp Duty Land Tax (Amendment of Part 4 of the Finance Act 2003) Regulations 2004 (S.I. 2004/1069), regs. 1, 4(2)(b)