Stamp Duty Land Tax is charged on the chargeable consideration, which is anything given in money or money’s worth for the property, not just the cash price. VAT actually payable on the purchase is included, as are debts the buyer takes over or releases, building works and services the buyer provides as part of the deal, and other property given in exchange, generally at market value.

What is chargeable consideration?

Schedule 4 paragraph 1 to the Finance Act 2003 defines it as any consideration in money or money’s worth given for the subject matter of the transaction, directly or indirectly, by the purchaser or a person connected with the purchaser. HMRC’s manual at SDLTM03700 lists the main non cash forms as the release or assumption of debt, works and services, and the transfer of other property. Unless the legislation says otherwise, non monetary consideration is valued at market value at the effective date (Schedule 4 paragraph 7).

Because the definition looks at what is given, not what the contract calls the price, payments by a connected person and payments routed through side agreements are caught. Where one payment covers several things, paragraph 4 requires a just and reasonable apportionment, and anything given for what is in substance one bargain is attributed to all its elements, even if the documents split it up.

Some costs are expressly excluded. SDLTM03710 confirms that a tenant paying the landlord’s reasonable costs on the grant, extension or enfranchisement of a lease is not consideration, and nor is a recipient’s liability to pay inheritance tax or capital gains tax on a gift.

Is VAT part of the price?

Yes. Schedule 4 paragraph 2 includes any VAT chargeable in respect of the transaction. SDLTM03800 stresses that this applies even where the buyer will recover the VAT as input tax, so a VAT registered business buying an opted commercial building pays SDLT on the VAT inclusive figure.

There are two important qualifications:

  • VAT that arises only because the seller opts to tax after the effective date is excluded. This mostly affects leases, where a landlord opts later and adds VAT to the rent.
  • If the sale is a transfer of a going concern that meets all the VAT conditions, no VAT is chargeable and SDLT is on the VAT exclusive price. If the conditions turn out not to be met and VAT is payable, SDLT is due on the VAT inclusive amount and the return must be amended.

The background VAT rules are covered in the option to tax on property and transfers of a going concern.

When do building works count?

Schedule 4 paragraph 10 deals with consideration consisting of works of construction, improvement or repair, or other works that enhance the value of property. The works are ignored only if all three conditions are met:

  1. they are carried out after the effective date of the transaction;
  2. they are carried out on the property acquired, or on other property held by the purchaser or a connected person; and
  3. it is not a condition of the transaction that the seller or a person connected with the seller carries them out.

Otherwise the works are chargeable at the amount that would have to be paid in the open market to have them carried out. HMRC’s examples at SDLTM04060A contrast a builder paying £1 million for a plot and also building a £750,000 workshop on the seller’s other property, which gives chargeable consideration of £1.75 million, with a developer obliged to build a leisure centre for the council on the plot it has bought after completion, where only the £5 million price is chargeable.

The opposite case is a buyer who contracts to buy a plot from a developer and separately pays the developer to build the house. SDLTM04015 explains HMRC’s view, based on Prudential Assurance Co Ltd v IRC [1992] STC 863, that normally only the plot plus any work done by the effective date is taxed. But if the two contracts are so interlocked that neither can be completed independently, the subject matter is the finished house and the total price is apportioned on a just and reasonable basis.

How is debt treated?

Under Schedule 4 paragraph 8, the satisfaction or release of a debt due to the buyer or owed by the seller, and the assumption of existing debt by the buyer, count as consideration. Debt includes contingent obligations and accrued interest. A secured debt is assumed whenever anyone’s rights or liabilities in relation to it change as a result of the transaction. Where debt is the consideration, the chargeable amount is capped at the market value of the property.

A common commercial example is a creditor taking a property in settlement of a loan: the amount of debt released is the price. The domestic version, where a family member takes over a mortgage, is explained in SDLT on gifts of property with a mortgage.

What about exchanges, services and other non cash consideration?

  • Exchanges. Where property is given in return for other property and any interest involved is a major interest, Schedule 4 paragraph 5 makes the chargeable consideration for each acquisition the greater of its market value and the consideration actually given. The new home part exchange is a common example, covered in SDLT on new homes bought with a part exchange.
  • Services. Services other than works are valued at what they would cost on the open market (paragraph 11).
  • Shares or other assets. These are valued at market value under paragraph 7.
  • Chattels. Carpets, curtains and free standing furniture are not part of the property, so a genuine, separately negotiated amount for them is excluded. SDLTM04010 says HMRC expects contemporaneous evidence and values at depreciated market value, and that fitted kitchens, bathrooms and heating systems are part of the property.

What if some of the price is paid later or depends on future events?

Deferred consideration is taxed in full at the outset: Schedule 4 paragraph 3 allows no discount for postponement. Contingent consideration, such as an overage payment due if planning permission is granted, must be included on the assumption that it will be paid (section 51(1)). Uncertain amounts, such as a share of future sale proceeds, are included at a reasonable estimate (section 51(2)).

When the contingency is resolved or the amount becomes known, section 80 applies. If more tax is due, a further return must be made within 30 days. If less is due, the return can be amended within the amendment window or a repayment claimed. Where consideration that is contingent or uncertain may fall due more than six months after the effective date, section 90 allows the buyer to apply to defer paying tax on that part.

How does this work in practice?

Illustration only. A company buys a commercial unit where the seller has opted to tax. The deal is £500,000 plus £100,000 VAT, a further £50,000 if planning permission for extra floors is granted, and the buyer will also resurface the seller’s adjoining yard, worth £40,000 on the open market.

Element Treatment Amount
Price Cash £500,000
VAT Included even though recoverable £100,000
Planning overage Contingent, assumed payable £50,000
Yard works On the seller’s property, so chargeable £40,000
Chargeable consideration £690,000

At the non residential rates for 2026 to 2027, that is 0% on £150,000, 2% on £100,000 and 5% on £440,000, giving £24,000. If planning is refused, the buyer can recover the tax on the £50,000.

What mistakes are common?

  • Using the VAT exclusive price because the VAT will be recovered.
  • Leaving out deferred or overage payments on the basis that they may never be paid.
  • Ignoring works the buyer has agreed to do for the seller elsewhere.
  • Claiming large deductions for chattels without a separately priced list in the contract.
  • Forgetting that a mortgage taken over is consideration even when no cash changes hands.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.