What Are Linked Transactions?, FA 2003 s.108
FA 2003 s.108 provides that transactions are 'linked' if they form part of a single scheme, arrangement, or series of transactions between the same vendor and purchaser (or persons connected with them). Connected persons include spouses/civil partners, relatives, companies under common control, and associated companies. Separate contracts and different completion dates do not prevent transactions from being linked if they are part of the same commercial plan. The anti-fragmentation purpose is explicit: the rule prevents buyers splitting portfolio purchases into smaller transactions to fall below SDLT thresholds. Unlike some anti-avoidance rules, there is no commercial purpose carve-out.
Effect of Linking, Aggregate Consideration and SDLT Calculation
Where transactions are linked, SDLT is calculated on the total aggregate consideration (FA 2003 s.108(2)), determining which SDLT rate applies, whether the additional dwellings surcharge (the additional dwellings surcharge (England and Northern Ireland higher rates), 5% from 31 October 2024) applies, and whether MDR is beneficial. The SDLT is then allocated proportionately between the linked transactions. MDR (FA 2003 Schedule 6B) calculates SDLT on the average price per dwelling, which can significantly reduce the charge on portfolio purchases, subject to a minimum of 1% of aggregate consideration.
Commercial Property, Mixed-Use, and Devolved Equivalents
Commercial SDLT rates (0% to £150,000; 2% to £250,000; 5% above £250,000) apply on an aggregated basis for linked commercial transactions. Mixed-use properties attract non-residential rates on the whole consideration (MDR not available). Commercial lease SDLT (NPV of rent) is calculated separately but within the linked transactions framework. LBTT (Scotland) under LBTT(S)A 2013 s.23 and LTT (Wales) under Wales Act 2017 apply materially similar linked transactions rules with different thresholds and rates.
SDLT Return Filing and HMRC Enquiries
Each linked transaction must be reported on a separate SDLT return within 14 days of completion, identifying the link (Box 9), the aggregate consideration, and the SDLT calculated on the aggregated basis. MDR must be explicitly claimed on the return. SDLT returns can be amended within 12 months of the filing deadline. HMRC actively challenges artificially split portfolio purchases; document the linked transactions analysis before completion. Late filing attracts penalties from day 15 (£100) and day 31 (£200).