Finance Act 2003, section 71A

Alternative property finance: land sold to financial institution and leased to person

Part 4 Stamp duty land tax

(1)This section applies where arrangements are entered into between [F211 a personF211] and a financial institution under which—

(a) the institution purchases a major interest in land or an undivided share of a major interest in land (“the first transaction”),

(b)where the interest purchased is an undivided share, the major interest is held on trust for the institution and the [F210 personF210] as beneficial tenants in common,

(c) the institution (or the person holding the land on trust as mentioned in paragraph (b)) grants to the [F210 person F210] out of the major interest a lease (if the major interest is freehold) or a sub-lease (if the major interest is leasehold) (“the second transaction”), and

(d)the institution and the [F210 personF210] enter into an agreement under which the [F210 personF210] has a right to require the institution or its successor in title to transfer to the [F210 personF210] (in one transaction or a series of transactions) the whole interest purchased by the institution under the first transaction.

(2)The first transaction is exempt from charge if the vendor is—

(a)the [F210 personF210] , or

(b)another financial institution by whom the interest was acquired under arrangements of the kind mentioned in subsection (1) entered into between it and the [F210 personF210] .

(3)The second transaction is exempt from charge if the provisions of this Part relating to the first transaction are complied with (including the payment of any tax chargeable).

(4) Any transfer to the [F210 person F210] that results from the exercise of the right mentioned in subsection (1)(d) (“a further transaction”) is exempt from charge if—

(a)the provisions of this Part relating to the first and second transactions are complied with, and

(b)at all times between the second transaction and the further transaction—

(i)the interest purchased under the first transaction is held by a financial institution so far as not transferred by a previous further transaction, and

(ii)the lease or sub-lease granted under the second transaction is held by the [F210 personF210] .

(5)The agreement mentioned in subsection (1)(d) is not to be treated—

(a)as substantially performed unless and until the whole interest purchased by the institution under the first transaction has been transferred (and accordingly section 44(5) does not apply), or

(b)as a distinct land transaction by virtue of section 46 (options and rights of pre-emption).

[F212 (6)The requirements of subsection (1), or (4)(b)(ii), are not met if—

(a)the [F210 personF210] enters into the arrangement, or holds the lease or sub-lease, as trustee and any beneficiary of the trust is not [F211 a personF211] , or

(b)the [F210 personF210] enters into the arrangements, or holds the lease or sub-lease, as partner and any of the other partners is not [F211 a personF211] .F212]

(7)A further transaction that is exempt from charge by virtue of subsection (4) is not a notifiable transaction unless the transaction involves the transfer to the [F210 personF210] of the whole interest purchased by the institution under the first transaction, so far as not transferred by a previous further transaction.

F213 (8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9)References in this section to [F211 a personF211] shall be read, in relation to times after the death of the [F210 personF210] concerned, as references to his personal representatives.

F214 (10)F209] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Definitions used in section 71A 16

arrangements

40 In this Part of this Schedule “arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable.

Defined in Sch.15 para.40 · see it in the full Act
the person

(c) has not previously been, or been one of the persons who was, “the person” for the purposes of section 71A or 73 in a case where the main subject-matter of the first transaction within the meaning of the section concerned was a major interest in a dwelling, and

Defined in Sch.6ZA para.6(1) · see it in the full Act
financial institution

(1) In sections 71A to 73B “financial institution” has the meaning given by section 564B of the Income Tax Act 2007 .

Defined in s.73BA(1) · see it in the full Act

(3) In sections 71A, 73AB and 73B, “financial institution” also includes a person with permission under Part 4A of the Financial Services and Markets Act 2000 to carry on the regulated activity specified in Article 63F(1) of the Financial Services and Markets Act (Regulated Activities) Order 2001 ( S.I. 2001/544) (entering into regulated home purchase plans as home purchase provider).

Defined in s.73BA(3) · see it in the full Act
major interest

(1) References in this Part to a “major interest” in land shall be construed as follows.

Defined in s.117(1) · see it in the full Act
land

“land” includes—

(a)

buildings and structures, and

(b)

land covered by water;

Defined in s.121 · see it in the full Act
shares

In this sub-paragraph “shares” means shares in a company or securities as defined in section 254(1) of the Taxes Act 1988 issued by a company.

Defined in Sch.22 para.9(3) · see it in the full Act
the tenants

(a) a qualifying body grants an assured shorthold tenancy assured tenancy of a dwelling to a person (“the tenant”) or persons (“the tenants”), and

Defined in Sch.9 para.14(2) · see it in the full Act
the tenant

(a) a qualifying body grants an assured shorthold tenancy assured tenancy of a dwelling to a person (“the tenant”) or persons (“the tenants”), and

Defined in Sch.9 para.14(2) · 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
the first transaction

6B (1) This paragraph applies where section 72A (land in Scotland sold to financial institution and person in common) applies and the major interest in land purchased under the transaction mentioned in section 72A(1)(a) (“the first transaction”) consists of or includes a higher threshold interest.

Defined in Sch.4A para.6B(1) · see it in the full Act

(a) relief is claimed under paragraph 1 or 2 for a chargeable transaction (“the first transaction”), and

Defined in Sch.6ZA para.5(1) · see it in the full Act
vendor

(4) References in this Part to the “purchaser” and “vendor”, in relation to a land transaction, are to the person acquiring and the person disposing of the subject-matter of the transaction.

Defined in s.43(4) · see it in the full Act

(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 second transaction

(6) In this paragraph “the second transaction” has the same meaning as in section 71A, 72 or 73 (as the case requires).

Defined in Sch.4A para.6A(6) · see it in the full Act
tax

“tax”, unless the context otherwise requires, means tax under this Part.

Defined in s.121 · see it in the full Act
substantially performed

(5) In this paragraph “substantially performed” and “completed” have the same meanings as in section 44 (contract and conveyance) .

Defined in Sch.17A para.12A(5) · 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
trustee

(6) In sub-paragraph (5) “trustee” is to be read in accordance with section 1123(3) of CTA 2010 (“connected” persons: supplementary).

Defined in Sch.7A para.19(6) · see it in the full Act

(6) In sub-paragraph (5) “trustee” is to be read in accordance with section 1123(3) of CTA 2010 (“connected” persons: supplementary).

Defined in Sch.7A para.9(6) · see it in the full Act

(8) In sub-paragraph (7) “trustee” is to be read in accordance with section 1123(3) of CTA 2010 (“connected persons”: supplementary).

Defined in Sch.4A para.5A(8) · see it in the full Act

Cases considering section 71A 5

Project Blue Limited v Commissioners for Her Majesty’s Revenue and Customs

[2018] UKSC 30 · 13 June 2018Interprets

Construed as a self-contained regime using real-world transactions to exempt specified elements of Ijara finance and place it on a level footing with conventional secured lending. (see paras [23]-[38]) Defines the qualifying arrangement through the institution’s purchase, leaseback and agreement for eventual transfer. The transactions satisfied that description. (see paras [13]-[18]; [25]; [34]) The institution’s purchase of a major interest was expressed in real-world language rather than as the acquisition of a statutory chargeable interest. (see paras [24]-[25]) Its description of the leaseback in real-world terms supported the self-contained construction of section 71A. (see paras [24]-[25]) Exempted the institution’s purchase where its customer was the real-world vendor. Project Blue Limited sold the freehold to the financier and therefore satisfied the provision. (see paras [23]-[38]) The condition that the vendor be the financed customer was satisfied by asking who actually sold the major interest to the institution. (see paras [25]; [30]; [35]) Exempted the leaseback where the statutory requirements governing the institution’s purchase had been complied with. (see paras [15]-[18]) Forms part of the regime exempting the institution’s eventual transfer of its interest back to the financed customer. (see paras [16]-[17])

Project Blue Ltd v Revenue and Customs

[2016] EWCA Civ 485 · 26 May 2016Limits

Section 71A provides alternative property finance relief for specified acquisition, lease and option arrangements. The Court construed it as preserving a single SDLT charge on acquisition from the third-party vendor. (see paras [18]-[21], [33]-[35]) Section 71A(1) describes the alternative finance arrangement involving acquisition of a major interest, a lease or sub-lease, and an agreement enabling the customer to acquire the interest. The Court treated Ijara financing as falling within this structure. (see paras [19]-[20]) The first transaction is the financial institution’s purchase of a major interest or undivided share. The Court treated MAR’s acquisition as the relevant purchase for SDLT purposes. (see paras [19]-[21], [29]-[35]) The provision addresses an undivided share held on trust for the institution and customer as tenants in common. The Court discussed this as part of the statutory Musharaka structure. (see paras [19], [47]) The second transaction is the grant of a lease or sub-lease from the major interest. The Court treated the lease to the customer as part of the Ijara arrangement. (see paras [19]-[21]) The arrangement includes a right requiring transfer of the interest acquired by the institution. The Court referred to the options as part of the statutory financing structure. (see paras [19]-[20]) The first transaction is exempt only if the vendor is the finance customer or another qualifying financial institution. The Court held that the original vendor, not Project Blue, was the vendor under section 45(3). (see paras [20]-[21], [28]-[35]) The first transaction may be exempt where the vendor is the person making the finance arrangements. The Court held that this condition was not satisfied because the deemed vendor was the Ministry of Defence. (see paras [19]-[21], [35]) The alternative condition concerns an interest acquired by another financial institution under equivalent arrangements. The Court found no basis for applying that condition to make the present acquisition exempt. (see paras [19]-[21], [35]) The lease transaction is exempt only if the requirements for the first transaction, including payment of any tax, are met. The Court used this to link the lease exemption to the chargeability of MAR’s acquisition. (see paras [19]-[21], [33])

The Tower One St George Wharf Limited v The Commissioners for HMRC

[2025] EWCA Civ 1588 · 10 December 2025

The provision was mentioned in explaining the earlier Project Blue litigation concerning a relief claim and section 75A. It was not otherwise applied in this appeal. (see paras [104]-[107])

What each judgment says about section 71A is in the case-law panel in the full Act.

Amendments and notes

6 notes from legislation.gov.uk

Amendments

  1. F209S. 71A inserted (with effect in accordance with Sch. 8 para. 7 of the amending Act) by Finance Act 2005 (c. 7), Sch. 8 para. 2
  2. F210Word in ss. 71A-73 substituted (with effect in accordance with s. 168(5) of the amending Act) by Finance Act 2006 (c. 25), s. 168(1)
  3. F211Words in ss. 71A-73 substituted (with effect in accordance with s. 168(5) of the amending Act) by Finance Act 2006 (c. 25), s. 168(1)
  4. F212S. 71A(6) ceased to have effect (with effect in accordance with s. 168(5) of the amending Act) by virtue of Finance Act 2006 (c. 25), s. 168(2)
  5. F213S. 71A(8) omitted (with effect in accordance with Sch. 21 para. 6 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 21 para. 3(1)
  6. F214S. 71A(10) omitted (with effect in accordance with s. 29(4) of the amending Act) by virtue of Scotland Act 2012 (c. 11), s. 44(2)(b)(3)(b), Sch. 3 para. 9 (with s. 29(5)(6)); S.I. 2015/637, art. 2