Understanding Goodwill in Stamp Duty Land Tax Transactions and Valuation Guidance

SDLT treatment of goodwill in business property sales

When land is sold with a trading business, SDLT is charged on the part of the price that relates to the land and anything forming part of it. What is called “goodwill” may either be part of the land’s value or a separate business asset, so the label in the contract does not decide the SDLT position.

• SDLT applies to land, buildings, structures and fixtures, not just the bare site.
• Goodwill can be either inherent in the land or separate from it as an intangible business asset.
• If the value described as goodwill is really part of the property’s value as trading premises, it remains within SDLT.
• If there is genuinely separate business goodwill, the price may need to be apportioned between land and non-land assets.
• HMRC generally looks at the difference between the going-concern value of the business and the value of its tangible assets to identify possible separate goodwill.
• Valuation and categorisation can be difficult in practice, and disputes may be referred to the Valuation Office Agency; old stamp duty rules excluding goodwill do not apply to SDLT.

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SDLT and goodwill: when it is part of the land transaction

This page explains how goodwill is treated for Stamp Duty Land Tax when land is bought as part of a business sale. The key point is that SDLT is charged on land, but what people call “goodwill” may sometimes be part of the land and sometimes be something separate. That distinction matters because it affects how much of the price is potentially within SDLT.

What this rule is about

SDLT applies to transactions in land. That includes not just the bare site, but also things that form part of the land in law, such as buildings, structures and fixtures.

When a property is sold together with a business, part of the price may be described as payment for goodwill. The legal question is whether that goodwill is actually part of the land interest being transferred, or whether it is a separate intangible business asset.

This matters because SDLT is concerned with the land transaction. If what is labelled as goodwill is really part of the value of the land, it is not taken out of charge simply by being given a different label.

What the official source says

HMRC’s manual says that what is described as goodwill may or may not be included in the subject matter of the SDLT charge.

It draws a distinction between:

• goodwill that forms part of the land, sometimes called inherent goodwill, because it is inherent in the land itself, and
• goodwill that is separate from the land, sometimes called free goodwill.

The manual also says that goodwill which does not form part of the value of the land will only arise where a business or part of a business is being sold, although even in that situation there may not necessarily be any such separate goodwill.

For Capital Gains Tax and SDLT purposes, HMRC says the value of goodwill and other separately identifiable intangible assets will usually be the difference between:

• the value of the business as a going concern, and
• the value of the tangible assets, such as property, fixtures, fittings and chattels.

The manual also makes two practical points. First, disputes about whether something is goodwill, or about the valuation of separate goodwill where an apportionment is needed, should be referred to the Valuation Office Agency. Second, an old statutory exclusion for goodwill from stamp duty does not apply to SDLT.

What this means in practice

If you buy land on its own, goodwill is usually not a live issue. It becomes important where you buy premises together with a trading business, such as a hotel, pub, care home, shop or similar operation.

In those cases, the total price may reflect several things at once:

• the land and buildings,
• fixtures that pass with the land,
• other tangible assets such as fittings or chattels, and
• the value of the business as a going concern, including any separate intangible value.

The SDLT question is not answered just by the wording in the contract. Calling part of the price “goodwill” does not by itself mean that amount falls outside the land charge. The real issue is whether that value is inherent in the land or is a separate business asset.

If the value is inherent in the land, it remains part of what is chargeable to SDLT. If it is genuinely separate goodwill, an apportionment may be needed so that the land element and non-land element are identified properly.

The manual also makes clear that you cannot rely on the old stamp duty rule excluding goodwill. SDLT is a different tax with a different statutory framework.

How to analyse it

A sensible way to approach the issue is to ask the following questions.

• Is there a sale of land only, or a sale of a business as a going concern as well?
• What assets are actually being transferred: land, fixtures, fittings, stock, licences, contracts, brand value or customer connection?
• Is the value said to be “goodwill” really inseparable from the property itself, or does it arise from the business carried on from it?
• Has the purchase price been apportioned, and if so, is that apportionment commercially and evidentially supportable?
• Does the valuation of the business as a going concern exceed the value of the tangible assets, suggesting a separate intangible element?

In practice, the analysis often starts with identifying the tangible assets and their value. If the business as a whole is worth more than those tangible assets, the balance may represent goodwill or other identifiable intangible assets. But that still leaves the further question whether the “goodwill” is separate from the land or inherent in it.

Where the answer is not clear, valuation evidence may be important. The HMRC material points readers towards the Valuation Office Agency for categorisation and valuation issues.

Example

A buyer acquires a freehold property from which a long-established trading business is run. The agreed price reflects the premises, the fixtures, some movable items, and the fact that the business is being bought as a going concern.

If part of the value is truly attributable to a separate business asset, such as customer connection or another identifiable intangible element not forming part of the land, that part may need to be separated from the land consideration.

But if the supposed “goodwill” is really just the value of the property as trading premises in that location, and is inherent in the land, it is not taken outside SDLT merely because the contract labels it as goodwill.

Why this can be difficult in practice

The main difficulty is that “goodwill” is often used loosely in commercial documents. Parties may use the term to describe any excess value in a business purchase, but SDLT requires a more precise analysis.

There can be real uncertainty over whether value is:

• part of the land itself,
• attached to the business independently of the land, or
• a mixture of both.

Valuation is also fact-sensitive. The manual says that separate goodwill is usually identified by comparing the going-concern value with the value of the tangible assets, but that does not remove the need to decide what kind of goodwill is present. In some business sales there may be no separate goodwill at all.

Another practical difficulty is that SDLT does not follow the old stamp duty treatment of goodwill. Anyone relying on older stamp duty concepts without checking the SDLT position may reach the wrong result.

Key takeaways

• SDLT applies to land and to things that form part of the land, including buildings, structures and fixtures.
• Goodwill may be part of the land value or may be a separate business asset; the label used in the contract is not decisive.
• Where a business is sold with property, careful apportionment and valuation may be needed to decide how much of the price is chargeable to SDLT.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Understanding Goodwill in Stamp Duty Land Tax Transactions and Valuation Guidance

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