When is LDST payable on options?

[delphi1]

I am considering buying a house that may get planning permission for the garden. The purchase price, for the whole would be £300k but I could buy the house at £215k and take an option to buy the garden area in 12 months time for £85k. This would help the vendor with possible CGT. As two transactions the SDLT, at 1% is £3k. As one transaction it is £9k.

Does taking an option on the garden make the whole thing one transaction?

If it does and SLDT is charged at 3%, when is it payable?

I know there have been lots of SDLT questions and I might have missed the answere to this one but thanks in anticipation to anyone that can help.

[Ian McTernan CTA]

My understanding of the Stamp Duty laws is not complete, but my understanding is that this is a linked series of transactions with a total value of £300K and hence the higher rate is payable under the present scheme. the solicitors acting may be able to structure the deal so that it does not fall into this, but you will need to discuss with them.

Ian McTernan CTA
McTernan Associates Ltd
Chartered Tax Advisers
ian@imcternan.com

[delphi1]

Many thanks for the info.

If it is a 'linked transaction' is all the £9k payed up front and if the option does not go ahead can you claim the £7k back?

[paulc]

I assume the option is being granted for a nominal amount (£1 or similar)
The way it works is that on the first transaction you will pay SDLT only on the amount paid at that stage. SO in your situation you will pay 1% of £215k. IF the option is never exercised, that is all you pay. If the option is exercised, that has two effects. As Ian says, the transaction are linked. So you now have to pay 3% on the whole £300k, less the £2,150 you have already paid.
So going down the option route results in the same amount of duty being paid if the option is exercised, but it delays payment of part.