Stamp duty when you pay the seller’s legal costs
Paying the seller’s legal costs
If you agree to pay the seller’s legal bill as part of the property deal, it can add to the amount used for SDLT.
- HMRC’s example adds £7,000 of legal costs to a £400,000 price.
- The resulting figure is £407,000.
- Whether the payment is part of the deal depends on the facts.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty when you pay the seller’s legal costs
If you agree, as part of buying a property, to pay the seller’s legal bill, add that bill to the amount used to work out stamp duty land tax (SDLT). The payment route does not change that.
What this rule is about
A lower sale price can look like a saving. But the seller may reduce it only because you will meet their legal costs.
Look at the whole bargain: what you give to get the property.
What the official source says
HMRC’s manual gives an example in which a seller cuts the price because the buyer agrees to pay the seller’s legal costs, including VAT. That matters.
Under the statute, the key issue is whether you give money, directly or indirectly, for the property; the label or payment route does not settle that question. Labels do not decide it.
- Start with the agreed price for the property.
- Add legal costs you agreed to pay for the seller.
- Include VAT charged on those costs.
What this means in practice
Do not dismiss the seller’s legal bill just because you pay it to their solicitor: if it forms part of the deal, it adds to the figure used for SDLT. It still counts.
- Keep the price reduction and costs agreement together.
- Check the completion statement carefully.
- Make sure the SDLT figures reflect the full agreed payment.
How to analyse it
Ask one simple question first: was paying the seller’s bill part of what secured the property?
- What price was first discussed or advertised?
- Did the seller reduce that price because you accepted their costs?
- Who was meant to benefit from the payment?
Example
Maya agrees to buy a property advertised at £415,000 for £400,000, but during the deal she also agrees to pay the seller’s £7,000 legal bill, including VAT. She pays £407,000 in all.
HMRC’s example treats £407,000 as the amount used for SDLT.
Why this can be difficult in practice
People can miss this when they renegotiate a price shortly before completion.
A payment described as a separate contribution may still form part of the deal, while a truly separate payment may raise a different question. Context matters.
- Read the emails as well as the contract.
- Check whether the payment was a condition of the lower price.
- Remember that HMRC’s manual is guidance, not law.
Key takeaways
- A seller’s legal costs can count as part of the property deal.
- VAT on those agreed costs is included in HMRC’s example.
- The real question is what you agreed to give for the property.
Technical analysis
For advisers, and for anyone who wants to check the law behind this page. You do not need this section to understand the guidance above.
Legislation
- FA 2003 section 50 — points to rules on amounts given for property
- FA 2003 Schedule 4 para 1 — counts money given directly or indirectly for property
- FA 2003 Schedule 4 para 2 — includes VAT charged for the property transaction
Official guidance
The pages below are HMRC’s guidance. Guidance is not law. It sets out how HMRC reads the legislation, and it is not binding on you, on a tribunal or on a court. Where guidance and the legislation differ, the legislation wins. HMRC can also change or withdraw guidance, and it may not cover your facts.
Where this is not settled
- Whether a payment is truly part of the bargain for the property depends on the agreement and facts of the individual deal.
Evidence you would need
This kind of case is decided on the facts of the individual property. These are the records that usually settle it, and the ones an adviser would ask you for.
- The agreed purchase price and any price reduction
- Emails, heads of terms, or contract wording about legal costs
- The seller’s legal invoice, including any VAT
- The completion statement showing who paid the costs
Explore this with an AI
Readers often want to test their own situation. Copy the prompt below into ChatGPT, Claude or Gemini. It hands the model the actual legislation for this page rather than letting it answer from memory, and tells it to be explicit about what is uncertain. What comes back is information, not advice – check it against the links above.
I am researching UK Stamp Duty Land Tax (SDLT), which applies in England and Northern Ireland. MY QUESTION Stamp duty when you pay the seller’s legal costs [Replace this with your own situation: what you are buying, the price, the dates, who the buyer is, and what you plan to do with the property.] THE LAW THIS TURNS ON - FA 2003 section 50 - points to rules on amounts given for property https://www.legislation.gov.uk/ukpga/2003/14/section/50/2025-11-17 - FA 2003 Schedule 4 para 1 - counts money given directly or indirectly for property https://www.legislation.gov.uk/ukpga/2003/14/schedule/4/paragraph/1/2025-11-17 - FA 2003 Schedule 4 para 2 - includes VAT charged for the property transaction https://www.legislation.gov.uk/ukpga/2003/14/schedule/4/paragraph/2/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm03750 HOW I WANT YOU TO ANSWER 1. Work from the legislation above. Read it before answering. Guidance from HMRC is its view of the law, not the law, and does not bind a tribunal or a court. 2. Tell me what the rule actually requires, in plain English. 3. Tell me which facts decide the answer, and which facts would change it. 4. Tell me what evidence I would need to support the position. 5. Be explicit about anything unsettled or fact-sensitive. Do not guess. 6. Your training data has a cutoff and SDLT rates and reliefs change at fiscal events. Say so if you are not sure the law is current. POINTS ALREADY KNOWN TO BE UNCERTAIN ON THIS TOPIC - Whether a payment is truly part of the bargain for the property depends on the agreement and facts of the individual deal. Do not give me a conclusion you cannot support from the provisions above.
Legislation links show Finance Act 2003 as it stood on 2025-11-17. The law may have changed since, and the rules that apply are those in force on the date of your transaction. The official guidance this page is based on is here.
This page was last updated on 31 August 2026
Useful article? You may find it helpful to read the original guidance here: Stamp duty when you pay the seller’s legal costs
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