Stamp Duty Land Tax (SDLT) may be payable when property or land is bought or transferred, whether or not the transaction involves payment of money and/or non-monetary consideration (which can include goods, services or the assumption of financial liabilities). The total amount on which SDLT is payable is known as the ‘chargeable consideration’.
In a straightforward deal such as the cash purchase of a house, the chargeable consideration is simply the price paid for the property. Deciding what counts as the chargeable consideration can be more complicated for other transactions.
SDLT does not usually apply if the property is given and received purely as a gift and there is no chargeable consideration.
This guide explains what counts as chargeable consideration and provides links to information about different types of situations.
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In most property transactions, money is paid in exchange for the property or land, or for an interest in land. But there are other ways of making payment, as outlined below.
Anything of economic value which is given in exchange for land or property counts towards the chargeable consideration.
As well as money, property can be exchanged for:
In many situations, payment may include both money and some other consideration. For example, a common situation involving transfer of a debt is when two people who jointly own a house split up, and one pays the other for their share of the equity and also takes on their outstanding mortgage liability.
The amount of the chargeable consideration includes anything paid for assets that form part of the land or property.
These assets can include:
It also includes the estimated value of any undertaking to carry out work or services, such as a promise from the vendor to carry out repairs to the property.
The chargeable consideration also includes any VAT payable on the transaction.
When the purchase price includes a payment for items that are not part of the chargeable consideration, those items must be valued at a rate reflecting their fair market value. For example, if carpets are included in the sale of a flat, the purchaser and vendor must agree a fair price which reflects their age and quality. This is then subtracted from the price paid to find the chargeable consideration.
The same rules apply if moveable assets such as machinery are included in the sale of a business. The portion of the purchase price allocated to such assets must be seen as fair and reasonable.
In some transactions, the purchaser may pay part of the agreed price on transfer, and the remainder at some later date (referred to as 'postponed consideration'). For example, a retiring business owner might agree to sell his premises to a colleague for £700,000 now with a further payment of £300,000 in a year's time.
In such cases, SDLT is still charged on the full amount up front - so in the example above, SDLT is charged on the total of £1 million. There is no discount or postponement of any SDLT payable just because there is a later payment.
Some transactions may include a later payment which will be made only if some future event occurs - called 'contingent consideration'. For example, a developer buying a plot of land might agree to pay an extra sum to the vendor if planning permission for redevelopment is granted.
In these cases SDLT is charged on the assumption that the contingency will occur. The purchaser can apply to defer payment of SDLT on the contingent amount, however, the tax is still charged at the appropriate rate for the total chargeable consideration.
For example, a builder buys a plot for £400,000 and agrees to pay a further £200,000 if he obtains planning permission for a new building. He can apply for deferment on SDLT on the conditional £200,000, but will have to pay SDLT on the initial payment now. The SDLT due on the initial payment will be paid at 4 per cent, because the total potential payment is above the £500,000 threshold.
Some transactions may include a later payment which depends on an unknown variable - for example, future payments based on the turnover of a business.
In these cases SDLT must be calculated on the basis of a 'just and reasonable estimate' of the amount involved. The purchaser can apply to defer payment of the uncertain or unascertainable element. Otherwise, an appropriate adjustment is made when the amount of consideration becomes certain.
For leasehold land and property, SDLT is payable on both the purchase price and on any substantial annual rent. The two parts are calculated separately, and the rules vary for residential and non-residential leases.
If property is transferred from one person to another without any monetary payment being made, SDLT may still payable. Whether it is or not depends on the exact circumstances of the transaction - in particular, on whether there is any non-monetary chargeable consideration.
There are specific rules for calculating the value of the chargeable consideration on shared ownership leases. Such leases can arise when an occupier buys a property from a local authority or housing association through an assisted-purchase scheme such as 'HomeBuy or 'Co-ownership'.
Some transactions are considered as linked for the purposes of calculating SDLT. The values of each transaction are combined to find a total chargeable consideration.
For example, if a purchaser buys two apartments for £100,000 each from the same developer at the same time, then SDLT is calculated on the total of £200,000.