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HMRC internal manual

Stamp Duty Land Tax Manual

Commencement and transitional provisions

Transactions allegedly effected in pursuance of pre-royal assent oral contracts

A taxpayer may state that a post-implementation land transaction is outside the scopeof stamp duty land tax.

This would mean that the relevant documentation is subject to stamp duty because it waseffected in pursuance of an oral contract made before 10 July 2003 and eithersubstantially performed before that date or not subsequently varied or assigned.

This allegation is most likely to be made where the transaction is the grant of a lease,since the charging structure on the rental element under stamp duty land tax differs fromthat under stamp duty.

It is not always possible however to have an oral contract for the sale or lease of land.The legal rules are as follows.

England & Wales

A contract for the sale or other disposition of an interest in land must be in writingby virtue of section 2(1) Law of Property (Miscellaneous Provisions) Act 1989).

The only exception is an agreement for a lease where there is

  • a market rent
  • no premium
  • a lease term not exceeding three years, i.e. an under-three year lease

This includes yearly, monthly and weekly tenancies.

In practice it is unusual to have a prior agreement, oral or written, for an under-threeyear lease since the lease itself can be granted orally.


A written document is required for the constitution of a contract for the creation,transfer, variation or extinction of an interest in land by virtue of section 1(2)(a)(i)Requirements of Writing (Scotland) Act 1995.

The only exception is for a tenancy or other right to use or occupy land which is for afixed period not exceeding one year. Periodic tenancies do not exist in Scotland.

Northern Ireland

There is no requirement for a contract for the sale or other disposition of an interestin land to be in writing. An oral contract for the sale or lease of land is thereforeperfectly valid.

An oral contract which is acted upon, and certainly one where the tenant goes intopossession, will generally be enforceable.

A post-implementation transaction can be outside the scope of stamp duty land tax howeveronly if it is effected in pursuance of a pre-Royal Assent contract.

In other words the transaction must accord with what was agreed.

Most landlords and tenants under a lease will require certainty as to the terms of alease, and the terms may themselves be complex. This makes it most unlikely that theparties to a lease will be content with an oral agreement in any but the simplest oftransactions unless there is a contemporaneous memorandum of the agreement.

Equally a tenant may well have difficulty proving that the grant of a lease is inpursuance of an earlier oral agreement in the absence of a contemporaneous memorandum.

A yearly, monthly or weekly tenancy, or a lease for a fixed period of less than one year,or possibly not exceeding one year, can be granted orally; it would be unusual to have aprior contract for such a lease.