Understanding Sale by Tender Fees: Example of Bungalow Purchase and Tender Fee Calculation

SDLT and compulsory sale by tender fees

For Stamp Duty Land Tax, a fee linked to buying a property can count as part of the taxable price if the buyer must pay it to complete the purchase. HMRC’s view is that a compulsory tender or similar fee is included in the chargeable consideration, even if it is paid separately or to an estate agent rather than the seller.

• SDLT is based on everything the buyer must give to acquire the property, not just the stated purchase price.
• If a sale by tender fee is a condition of the purchase, HMRC treats it as part of the chargeable consideration.
• In HMRC’s example, a winning bid of £350,000 plus a required £5,000 tender fee means SDLT is charged on £355,000.
• The name of the payment does not decide the tax treatment; what matters is whether it is compulsory for the purchase.
• A fee may still count even if it is paid to an estate agent or intermediary instead of the seller.
• Buyers should check the contract, sales terms and related documents for any required extra payments linked to the acquisition.

Scroll down for the full analysis.

SDLT and sale by tender fees: when the fee is part of the price

This page explains how Stamp Duty Land Tax applies where a buyer pays a “sale by tender” or similar fee to secure a property. The key point from the official HMRC material is simple: if buying the property is conditional on paying that fee, the fee is treated as part of the chargeable consideration for the land transaction.

What this rule is about

SDLT is charged by reference to the consideration given for a land transaction. In straightforward cases, that is the purchase price. But the amount counted for SDLT is not always limited to the figure described as the price in the sale contract.

Sometimes a buyer must make an additional payment connected with the purchase. A common example is a “sale by tender” arrangement, where bids are invited and the successful bidder must also pay a fee to the estate agent or another party involved in the sale process.

The legal issue is whether that extra payment is really separate from the purchase, or whether it forms part of what the buyer gives in order to acquire the property.

What the official source says

The HMRC manual gives an example of a bungalow sold through sealed bids. The winning bid is £350,000. The buyer is then told that the purchase is conditional on paying the estate agent a tender fee of £5,000 including VAT, and the buyer agrees.

HMRC’s conclusion is that the chargeable consideration is £355,000. In other words, the SDLT calculation includes both:

• the £350,000 bid amount, and
• the £5,000 tender fee.

The reason is built into the example: payment of the fee is a condition of the purchase. That means the fee is part of what the buyer must give to obtain the property.

What this means in practice

If you cannot buy the property unless you pay the fee, HMRC’s example indicates that the fee should be included in the SDLT consideration.

This matters because SDLT is calculated on the total chargeable consideration. Even a relatively small additional fee can affect the SDLT amount due, and in some cases may affect which SDLT band or rate applies.

The practical lesson is that you should not look only at the headline purchase price. You should also ask whether there are any compulsory payments linked to the acquisition, even if they are described as:

• a tender fee
• an auction-style buyer’s fee
• an administration fee
• an estate agent fee payable by the buyer

The label is not the main point. What matters is whether the payment is required as part of acquiring the property.

How to analyse it

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

• What payments must the buyer make in order to complete the purchase?
• Is the extra fee optional, or is it a condition of the sale?
• Who receives the fee? A payment to an estate agent or intermediary may still count if it is part of what the buyer must give to obtain the property.
• Does the contract, memorandum of sale, tender terms, or sales particulars make the fee a required part of the transaction?
• Is the amount described separately from the purchase price only as a matter of form, even though in substance it is part of the cost of acquiring the property?

On the HMRC example, the analysis is short because the facts are clear: the buyer was told that the purchase was conditional on paying the fee, and agreed. That makes the fee part of the chargeable consideration.

Example

A property is marketed through a sealed bid process. A buyer offers £350,000 and is successful. The seller or agent then states that the buyer can proceed only if the buyer also pays a £5,000 tender fee to the estate agent. The buyer accepts that condition.

On HMRC’s approach in the official example, SDLT is not calculated only on £350,000. It is calculated on £355,000, because the buyer had to pay both amounts to acquire the property.

Why this can be difficult in practice

The difficult cases are those where the extra payment is described as being for something separate, or where the documents are unclear about whether the payment is truly compulsory.

The source material here gives only a short example. It does not try to resolve every possible variation. In practice, questions may arise where:

• the fee is said to be for services rather than for the land transaction itself
• the buyer argues that the payment is voluntary
• the obligation appears in side terms rather than the main sale contract
• the fee is payable to someone other than the seller

Those points can be fact-sensitive. The central issue remains whether the payment is part of what the buyer must give in order to acquire the property. If it is, HMRC’s example suggests it should be included in chargeable consideration.

Key takeaways

• A compulsory sale by tender fee can be part of the SDLT consideration.
• The fee may count even if it is paid to the estate agent rather than the seller.
• The key question is whether paying the fee is a condition of buying the property.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Understanding Sale by Tender Fees: Example of Bungalow Purchase and Tender Fee Calculation

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