A land purchase option is a binding right granted by a landowner for a fee giving a potential buyer the right to purchase until a given date. 1. When granting the option on 1 January 2020 for £250,000, the SDLT would be calculated at £250,000 at the non-residential rates in effect on 1 January 2020, i.e. £2,000. The granting of the option or right is the acquisition of a minor stake. It is only subject to declaration if the property tax stamp duty (SDLT) is or is to be paid, but for the availability of relief. However, the transaction may be subject to reporting, as you have rightly indicated, and the exercise of the tax option may be due, as it is a related transaction (see section 77 (1) (b) and section 81A of the Finance Act 2003 (FA 2003)). According to FA03/S81A, an additional return is needed with regard to the £250,000 option price, now linked to the £3,000,000 purchase price. The acquisition of an option and the acquisition of a right of pre-emption are land transactions and a charge may be borne by the Stamp Duty Land Tax (SDLT).

The sale, modification or assignment of an option or subscription right constitutes the acquisition of a taxable interest rate that may also be attributable to SDLT. The acquisition of the option by P Limited is a separate land transaction. The effective date of this transaction is January 1, 2020 [FA03/S46 (3)]. Since the underlying land is non-residential property, the option is subject to the rates applicable to the non-residential property and the option is taxable in accordance with Table B. Once the purchase is completed in accordance with the exercise of the option, the purchase price of £3,000,000 is associated with the option price of £250,000. . . .