Guidance on Calculating Contingent or Uncertain Consideration for Stamp Duty Land Tax

SDLT where the purchase price is not fixed at completion

When part of the price for land is not known or depends on a future event, SDLT is still worked out at the effective date of the transaction. If the extra amount is contingent, it is treated as payable; if it is uncertain or not yet calculated, the buyer must make a reasonable estimate based on the information available at that time.

• Contingent consideration means an amount becomes payable, or changes, depending on a future event.
• Uncertain or unascertained consideration means the amount is not yet known at the effective date, such as where it depends on future accounts or profits.
• For contingent amounts, SDLT is calculated on the basis that the amount will be paid, not on whether payment seems likely.
• For uncertain amounts, the buyer must use a reasonable estimate of the final price using the facts, contract terms and pricing formula available at the effective date.
• This can affect the SDLT due at the start, the rate band that applies, and whether later amendments or further steps are needed if the final figure changes.
• In some cases, payment of SDLT may be deferred by application, but that does not change the basic rule for calculating the consideration initially.

Scroll down for the full analysis.

SDLT on contingent, uncertain or unascertained consideration

This page explains how SDLT works when the price for land is not fixed at completion. The rule matters where part of the consideration depends on a future event, or where the amount is not yet known when the transaction becomes effective. In those cases, SDLT is not postponed until the final figure is settled. The purchaser must work out the chargeable consideration using special rules at that point.

What this rule is about

SDLT is normally charged by reference to the consideration given for the land transaction. That is straightforward where the price is a fixed sum. It is less straightforward where some of the price may become payable only if something happens later, or where the amount cannot yet be calculated.

The official material deals with two related situations:

• contingent consideration, where a future event affects whether an amount becomes payable or affects its amount; and
• uncertain or unascertained consideration, where the amount is not yet known at the effective date, for example because it depends on figures that will only be available later.

The point of the rule is to stop SDLT being left open-ended simply because the final price is not yet fixed.

What the official source says

HMRC’s manual, referring to Finance Act 2003 section 51, says that where a contingency affects the eventual amount of consideration, the purchaser must calculate the consideration on the basis that the contingent amount will be payable.

It also says that where the consideration is uncertain or has not yet been ascertained, the purchaser must make a reasonable estimate of the final consideration as at the effective date of the transaction.

The manual gives, as an example of uncertain or unascertained consideration, a price linked to profits shown in accounts that have not yet been prepared.

The source also notes that in some cases an application may be made to defer payment of SDLT under Finance Act 2003 section 90.

What this means in practice

The practical effect is that the SDLT return cannot simply say “the amount will be known later”. A figure must usually be brought into account at the effective date.

If the additional amount is contingent, the starting point is to assume that it will be paid. That means SDLT is calculated as if the contingency will occur or as if the contingent amount will become due.

If the amount is uncertain or unascertained, the purchaser must estimate the final amount reasonably at that date. The estimate is not a free choice. It should be based on the facts and information available when the transaction becomes effective.

This can affect:

• the amount of SDLT payable initially;
• whether the transaction falls into a higher rate band;
• whether further steps are needed later if the final figure differs from the amount originally returned; and
• whether a deferral application may be relevant in a suitable case.

The rule is about timing as well as amount. It tells you how to measure consideration at the effective date, even though the commercial bargain may still be unfolding.

How to analyse it

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

• Is part of the price fixed, and is part of it variable?
• Is the variable amount contingent on a future event, or is it simply not yet known?
• If it is contingent, what amount would be payable if the contingency is assumed to occur?
• If it is uncertain or unascertained, what is a reasonable estimate of the final amount at the effective date?
• What evidence supports that estimate, such as accounts, forecasts, contractual formulae, or other commercial data?
• Does the structure of the contract make a deferral application potentially relevant?

It is important to focus on the effective date of the transaction. The estimate must be made by reference to what can reasonably be known then, not with hindsight.

It is also important to separate two ideas that are sometimes blurred together:

• a contingency, where the law tells you to assume the contingent amount will be payable; and
• an amount that is not yet ascertained, where the law requires a reasonable estimate.

The contract terms matter. So does the mechanism for calculating the price. A formula based on future profits, turnover, planning success, or another measurable outcome may still require immediate SDLT analysis even though the final number will only emerge later.

Example

Suppose a buyer acquires land for a fixed sum plus an additional amount calculated by reference to the seller’s business profits for a period that has not yet ended. At the effective date, the final accounts do not exist, so the extra amount cannot yet be calculated exactly.

Under the approach described in the official material, the buyer cannot ignore that extra element. The buyer must make a reasonable estimate of the final amount as at the effective date and calculate SDLT on that basis.

By contrast, if the contract says an extra payment will become due only if a stated future event happens, and that event affects whether the amount is payable, the calculation is made on the basis that the contingent amount will be payable.

Why this can be difficult in practice

The line between a contingent amount and an uncertain or unascertained amount is not always obvious from the contract wording alone. Some pricing mechanisms contain elements of both.

There can also be real judgement in deciding what counts as a reasonable estimate. The official material gives the rule, but not a detailed formula for every case. Much will depend on the pricing mechanism and the information available at the effective date.

Another difficulty is that commercial parties often think in terms of what is likely to happen. For contingent consideration, however, the manual states that the purchaser must calculate on the basis that the contingent amount will be payable. That is not the same as asking whether payment is probable.

Finally, a reader should not assume that the possibility of deferring payment changes the underlying chargeable consideration rule. The source says only that a deferral application may be available in certain circumstances. That is a separate point from how the consideration is initially calculated under section 51.

Key takeaways

• If part of the price is contingent, SDLT is calculated on the basis that the contingent amount will be paid.
• If the price is uncertain or not yet ascertained, the purchaser must make a reasonable estimate at the effective date.
• The contract terms, the pricing formula, and the evidence available at the effective date are central to getting the SDLT treatment right.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guidance on Calculating Contingent or Uncertain Consideration for Stamp Duty Land Tax

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