Finance Act 2003 s.46 – Options and rights of pre-emption

(a)an option binding the grantor to enter into a land transaction, or

(b)a right of pre-emption preventing the grantor from entering into, or restricting the right of the grantor to enter into, a land transaction,

is a land transaction distinct from any land transaction resulting from the exercise of the option or right.

They may be “linked transactions” (see section 108).

(2)The reference in subsection (1)(a) to an option binding the grantor to enter into a land transaction includes an option requiring the grantor either to enter into a land transaction or to discharge his obligations under the option in some other way.

(3)The effective date of the transaction in the case of the acquisition of an option or right such as is mentioned in subsection (1) is when the option or right is acquired (as opposed to when it becomes exercisable).

(4)Nothing in this section applies to so much of an option or right of pre-emption as constitutes or forms part of a land transaction apart from this section.

Definitions used in section 46 3

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
land transaction: (1) In this Part a “land transaction” means any acquisition of a chargeable interest. As to the meaning of “chargeable interest” see section 48.
Defined in s.43(1) · see it in the full Act
linked transactions: (2)Where there are two or more linked transactions with the same effective date, the purchaser, or all of the purchasers if there is more than one, may make a single land transaction return as if all of those transactions that are notifiable were a single notifiable transaction.
Defined in s.108(2) · see it in the full Act

Cases considering section 46 3

Oisin Fanning v The Commissioners for HMRC

[2023] EWCA Civ 263 · 13 March 2023

Confirms that acquiring an option binding the grantor to enter into a land transaction is a distinct land transaction from any transaction resulting from exercise of the option. This separate treatment did not materially alter the section 45 analysis. (see paras [16]-[17]; [56]) Applies the separate treatment of the acquisition of an option as a land transaction distinct from any later transaction arising on exercise. (see paras [16]-[17])

Project Blue Ltd v Revenue and Customs

[2016] EWCA Civ 485 · 26 May 2016

The Court noted that the put and call options were land transactions but generated no SDLT because they were granted for no consideration. (see para [13])

Ladson Preston Limited & Anor v The Commissioners for HMRC

[2022] UKUT 301 (TCC) · 15 November 2022

The judgment refers to this provision in stating that the main subject-matter is the chargeable interest transferred. That reasoning is consistent with the tribunal’s analysis that the relevant question concerns the chargeable interest acquired (see para [51]).

What each judgment says about section 46 is in the case-law panel in the full Act.

Amendments and notes

1 notes from legislation.gov.uk

Commencement

I19Pt. 4 wholly in force at Royal Assent subject to Sch. 19, see s. 124, Sch. 19 para. 1(1)