Notification Procedures for Additional Events in Stamp Duty Land Tax

SDLT on contingent consideration: notifying HMRC and paying extra tax

If part of the price for land was uncertain when the deal completed, such as overage or a payment linked to a later event, you may need to tell HMRC once that amount becomes known and pay any extra SDLT due. The correct filing method and deadline depend on whether the transaction was originally notified, and the tax must be recalculated using the total price for the whole transaction.

• Contingent consideration is a later payment that was not fixed at the effective date, for example if planning permission is granted or plots are sold.
• If the transaction was originally notified, HMRC says a further notification must usually be sent by letter within 30 days of the amount becoming known, quoting the deferment reference number.
• If no return was required originally, an SDLT1 return and any tax due must be filed within 14 days of the amount becoming known.
• The extra payment is not taxed on its own; SDLT must be recalculated by adding the newly known amount to the original consideration and checking the tax due on the total value.
• If there are several later payments in the same calendar month, HMRC may allow one monthly letter with a schedule of each payment, provided letter notification is the correct route.
• Rechecking the figures may show either more SDLT to pay or that too much was paid earlier, in which case a repayment with interest may be claimed.

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SDLT on contingent consideration: when you must notify HMRC and pay more tax

This page explains what happens when the amount you pay for land was not fully known when the transaction first took place, and later becomes certain. In SDLT, this commonly arises with contingent consideration, such as overage or further sums linked to later events. The rule matters because HMRC may require a further notification and further tax once the amount becomes known, even though the original transaction has already been reported.

What this rule is about

Some land transactions include consideration that is uncertain at the effective date of the transaction. A common example is where the buyer agrees to pay an extra amount if a future event happens, such as planning permission being granted or plots being sold.

Finance Act 2003 contains a procedure for dealing with this. Once the previously uncertain amount becomes known, the purchaser may need to notify HMRC and pay any additional SDLT. The procedure depends on whether the transaction was originally notified to HMRC and whether an SDLT return was required at that stage.

This is a procedural rule, but it has real tax consequences. Missing the notification deadline can create compliance problems, and the tax calculation must be revisited using the overall transaction value, not just the extra payment viewed in isolation.

What the official source says

HMRC’s manual states that, under section 90 Finance Act 2003, when contingent consideration becomes known, a notification is required within 30 days. The notification should quote the deferment reference number and include payment of any additional tax, either by cheque or by giving details of an electronic payment.

The manual then distinguishes between two situations:

• If no return was required originally, an SDLT1 return and any tax due must be submitted within 14 days from the date the consideration became known.
• If the transaction was originally notified, a further return is required in the form of a letter. That letter must be sent within 30 days of the consideration becoming known to the Stamp Office.

Where there are several additional payments in the same calendar month, for example on plot sales, HMRC says the notification letter should include details of each sale and a schedule breaking down the additional consideration paid on each plot during that month and the tax due. However, if this is the first notification relating to the transaction, an SDLT1 is required instead.

The manual also emphasises an important calculation point: when additional consideration is notified, the overall transaction value must be taken into account so that the correct SDLT rate is applied across both the original and the later consideration.

Finally, if revisiting the position shows that too much tax has already been paid, the purchaser can claim repayment of the overpaid amount, with interest running from the date of payment.

What this means in practice

The key practical point is that SDLT is not always finished when the original purchase completes. If part of the price depends on later events, you may have to revisit the return and tax once those events happen and the amount becomes certain.

You should not assume that the extra amount is taxed separately at whatever rate would apply to that extra slice alone. HMRC’s approach here is that the whole transaction value must be reconsidered. In practical terms, that means adding the newly known amount to the original consideration and checking what SDLT should have been charged on the transaction as a whole.

This can increase the total tax due. In some cases, it can also show that too much tax was paid earlier, in which case a repayment may be claimed.

The filing route matters:

• If the transaction had already been notified, the further notification is made by letter, not by filing a fresh ordinary return in the usual way.
• If no return had been required before, the later event can trigger the need for an SDLT1 return, and the deadline in the manual is 14 days from the date the consideration became known.

If the transaction involves repeated later payments, such as overage linked to individual plot sales, HMRC allows monthly reporting by letter covering all additional payments arising in that calendar month, provided the transaction has already reached the stage where letter notification is the correct route.

How to analyse it

A sensible way to approach this issue is to ask the following questions:

• Was part of the consideration contingent or uncertain when the transaction became effective?
• Has that amount now become known, and if so, on what date did it become known?
• Was the original transaction already notified to HMRC, or was no return required at that time?
• Which filing method now applies: an SDLT1 return or a further notification by letter?
• What is the total transaction value once the newly known amount is added to the original consideration?
• What SDLT should be payable on that total value?
• How much tax has already been paid, and is there additional tax to pay or an overpayment to reclaim?
• If there were several relevant payments in the same month, can they be reported together with a supporting schedule?

It is also important to keep the deferment reference number available. HMRC’s manual specifically says it should be quoted in the notification.

Example

This is an illustration only. A buyer acquires land and agrees to pay a further sum if plots are later sold. The original transaction is notified to HMRC, and SDLT is paid on the amount then known. Six months later, several plot sales occur and the amount of additional consideration for that month becomes known. The buyer must notify HMRC within 30 days, quoting the deferment reference number, and provide a breakdown of the individual plot sales and the extra consideration arising on each one. The SDLT is then recalculated by looking at the total consideration for the transaction, including both the original amount and the newly known amount, to work out the correct total tax position.

Why this can be difficult in practice

The main difficulty is often identifying exactly when the contingent consideration has “become known”. In straightforward cases, that may be obvious. In others, especially where calculations depend on later accounts, adjustments, or staged development events, the point at which the amount is truly known may be less clear.

Another practical difficulty is procedural. The manual uses different deadlines and different forms of notification depending on whether a return was required originally. If that starting point is misunderstood, the wrong filing route may be used.

The tax calculation can also be counterintuitive. Some readers may expect to calculate tax only on the extra amount paid later. HMRC’s manual makes clear that the whole transaction value must be considered to ensure the correct rate of tax applies overall.

Transactions with repeated overage or plot-sale payments can create an administrative burden. The monthly schedule approach helps, but only if the transaction has already been notified and this is not the first notification requiring an SDLT1.

Key takeaways

• When contingent consideration becomes known, HMRC may need to be notified and further SDLT may become payable.
• The correct filing route depends on whether the original transaction had already been notified or whether no return was required at that stage.
• The SDLT calculation must be revisited using the total transaction value, not just the extra payment considered on its own.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Notification Procedures for Additional Events in Stamp Duty Land Tax

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