Linked transactions are explained in more detail in LBTT2008.
Where a chargeable transaction is one of a number of linked transactions, the amount of tax for all of the linked transactions is first calculated using the appropriate rates and bands as if the linked transactions were a single transaction. The tax payable for an individual transaction is then reached by multiplying the total tax payable on all the linked transactions by the fraction individual consideration/total consideration.
The mechanism for calculating the tax is:
- Step 1 - Add the consideration for each transaction to give the total consideration;
- Step 2 - Multiply so much of the total consideration that falls within each band by the appropriate tax rate and add those up to give the total tax chargeable;
- Step 3 - Divide the consideration for the individual transaction by the total consideration to arrive at a fraction; and
- Step 4 - Multiply the total tax chargeable by the fraction reached in step 3. The result is the amount of tax chargeable on the individual transaction.
A worked example on linked transactions is provided separately on our website under LBTT Worked Examples.