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HMRC internal manual

Stamp Duty Land Tax Manual

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HM Revenue & Customs
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Scope: How much is chargeable: Non-cash consideration: Construction or similar works FA03/SCH4/PARA10: Example 4

Example 4

Company B enters into a contract to sell a freehold plot of land to unconnected company A. The consideration for the transaction is £1m and as a condition of the contract B will complete construction works on behalf of A. Those works have an estimated market value of £750,000 which will be paid for by A.

Prior to completion A pays over £950,000 and B begins the construction works.

The payment by A does not constitute substantial performance of the contract, as the market value of the construction works will be regarded as chargeable consideration. Because it is a condition of the transaction that the vendor carry out these works, the £950,000 is not more than 90% of the total consideration. An SDLT1 should be lodged on completion (or substantial performance if this occurs earlier) paying the SDLT due on the cash consideration of £1m plus the £750,000 market value of the construction works to be carried out by B; a total chargeable consideration of £1,750,000, which is the sum paid by A to B.