Finance Bill Tracking Service 2007 | Budget 2007 | Budget Notes

BN21 Stamp Duty Land Tax: exchanges of property between connected persons

Who is likely to be affected?

1   Individuals who exchange property, especially those who are married or related to each other.

General description of the measure

2   Legislation will be introduced in Finance Bill 2007 to amend the stamp duty land tax (SDLT) treatment of exchanges of property by providing that, where an exchange of property takes place between 'connected persons', the two legs are not 'linked' with each other for determining the rate of SDLT.

Operative date

3   The new treatment will apply where any land transaction which is part of an exchange takes place on or after the date that Finance Bill 2007 receives Royal Assent.

Current law and proposed revisions

4   The normal rule is that an individual who acquires property in the UK is charged SDLT by reference to what he or she pays for the property, regardless of any connection between him or her and the vendor, and regardless of the market value of the property.

5   But if there is an exchange of property the rule is different. In this case, any money moving between the two parties is ignored and stamp duty land tax is charged by reference to the market value of the property acquired. This measure does not make any change to this rule.

6   However if the parties are 'connected persons', for example as husband and wife or brother and sister, there is a further rule because the two legs of the exchange are 'linked transactions'. This means that the market values are aggregated and the rate of stamp duty land tax is that applicable to the aggregate. So if property worth 300,000 is exchanged for property worth 220,000 the rate of SDLT on both legs is 4%, the rate applicable to 520,000.

7   This measure will provide that the two legs of an exchange will not be linked with each other. So in the example above there will be a charge at 1% on the acquisition of the property worth 220,000 and a charge at 3% on the acquisition of the property worth 300,000.

Further advice

8   If you have any questions about this change, please contact the Stamp Taxes Helpline, 0845 603 0135. Information about Budget measures is available on the HM Revenue & Customs website at