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HMRC internal manual

Stamp Duty Land Tax Manual

Procedure: deferring payment in case of contingent or uncertain consideration FA03/S90: when application may be made: examples

Example 1

The consideration consists of an initial payment of £350,000 for land and a later payment of £50,000 for each set of 50 houses for which planning permission is granted. The purchaser expects to get permission for 200 houses.

Stamp Duty Land Tax is due 30 days after the due date on £350,000 even if there has been a successful application for deferral as the normal rules apply to the initial payment which is not contingent.

The rate of tax is calculated as if the contingency will happen so as the total consideration will be in excess of £500,000 the rate of tax due on the £350,000 initial payment is 4%.

Example 2

The circumstances are similar to example 1, but the initial payment is £100,000 and a further £50,000 to be paid for planning permission received for each set of 50 houses. This means that if permission were granted for 200 houses as expected the total consideration would be £300,000 and the rate of tax paid on the initial payment is 3%.

It transpires that planning permission is granted for 450 houses bringing the total consideration to £550,000.

The rate of tax is now 4% and there will be an adjustment made to the rate of tax payable at the filing date.

The regulations for deferred payments provide that this adjustment is made as a purchaser amendment under FA03/SCH10/PARA6 and not a FA03/S80 adjustment where contingency ceases or consideration is ascertained.