Stamp duty and goodwill when buying a business property
Goodwill and SDLT
When you buy a business and its property together, SDLT may apply only to the part of the price for the land and assets forming part of it.
- Separate business goodwill may sit outside SDLT.
- Goodwill inherent in the land may be included.
- The price split must be just and reasonable.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty and goodwill when buying a business property
If you buy a business with its premises, stamp duty land tax may not apply to every pound of the price. Goodwill’s connection to the land is the key issue. That distinction can change the SDLT amount.
What this rule is about
Goodwill is the extra value in a working business. Goodwill can arise from business advantages. Those advantages may include its name, customers, reputation, trading position or other benefits that help it earn money.
Where a business property is sold as part of a going concern, and the price covers bricks, land and fixtures as well as other elements, SDLT taxes the land transaction rather than the whole business sale. That distinction matters.
That sounds simple. Working out what the price really pays for can be hard.
What the official source says
HMRC’s manual says that some goodwill can form part of the land. It calls this goodwill inherent in the land. Other goodwill is separate from the land, sometimes called free goodwill.
- Buildings, structures and fixtures that form part of land can fall within SDLT.
- Goodwill may form part of the land’s value in some cases.
- Separate goodwill is distinct from the land.
- Separate goodwill will only arise on a sale of a business, or part of one, but will not arise in every business sale.
- HMRC says the value of goodwill and other separate intangible assets will usually be the gap between the business value and its tangible asset values.
The legislation takes a similar starting point, but does not use the manual’s goodwill labels. SDLT applies when you buy an interest or right in land. The amount paid for that land is what matters for the tax.
What this means in practice
If the deal includes land and a separate business, the total price may need dividing between them. The law requires a just and reasonable split where one payment relates partly to a land transaction and partly to another matter.
You cannot simply put a low figure beside the property and call the rest goodwill. The split must reflect what is really being bought.
- Include the value paid for the land and things that are part of it.
- Consider whether fixtures are included with the property.
- Identify movable items, such as stock or equipment, separately where appropriate.
- Consider whether there is a real, separate business asset called goodwill.
- Keep evidence showing how the figures were reached.
HMRC’s manual also says that the old stamp duty exclusion for goodwill under Finance Act 2002 does not apply to SDLT. The SDLT question is instead whether the value is for land or for something separate from it.
How to analyse it
Assess the whole bargain first. One contractual line cannot decide it. Ask what the buyer receives for the price and what each part is worth.
- Is this a purchase of land in England or Northern Ireland?
- Is the business being sold as a going concern with the property?
- What land, buildings and fixtures are included?
- What movable items or other non-land assets are included?
- Does the business have value beyond its tangible assets?
- If so, is that extra value separate goodwill or part of the land’s value?
- Does the contract split the price, and does the split match the evidence?
- Is the final split just and reasonable in the context of the whole bargain?
This is the part people get wrong: a contract label is useful evidence, but it does not by itself decide the SDLT result.
Example
Amir buys a small hotel business and its freehold property for £1,000,000. A valuation puts the land, building, fixtures, fittings and other tangible assets at £800,000. The remaining £200,000 may represent separate goodwill or other intangible assets, because the business is worth more as a going concern.
The evidence must show that the £200,000 is a separate business value, rather than value belonging to the property itself, before it can be treated accordingly for SDLT. Labels do not prove it. If it is separate goodwill, HMRC’s manual says it is not part of the land value. If it is inherent in the land, it may be included.
Why this can be difficult in practice
Businesses and properties often add value to each other. A successful pub can derive value from its trade while its site, building and fixtures may independently contribute substantial value to the overall bargain. Both sources matter. Separating those factors is a valuation exercise as well as a tax question.
- A business name alone does not prove that separate goodwill has a value.
- The presence of a business does not always mean there is goodwill outside the land value.
- Fixtures and fittings can be confused with movable equipment.
- A price split agreed by buyer and seller may still need stronger valuation support.
- The manual says HMRC may refer categorisation and valuation issues to the Valuation Office Agency.
HMRC’s manual is its view of the issue. It is not law. Although HMRC’s manual states its view of the issue rather than the law, the legislation remains the starting point, and the facts and evidence determine whether a fair split is possible. They decide the outcome.
Key takeaways
- SDLT applies to the land part of a business property deal.
- Separate goodwill can sit outside the amount charged to SDLT.
- Goodwill built into the land’s value may not sit outside it.
- A fair price split needs evidence, not just contract labels.
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 42 — stamp duty land tax charge on land transactions
- FA 2003 section 43 — what counts as a land transaction; what is included in the land bought
- FA 2003 section 48 — interests and rights in land within SDLT
- FA 2003 section 50 — rules for working out the amount paid
- FA 2003 Schedule 4 para 1 — money or value given for the land
- FA 2003 Schedule 4 para 4 — fairly splitting a price between different matters
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
- The supplied material does not give a complete test for telling land-based goodwill from separate business goodwill.
- The supplied material does not set a valuation method for a particular business or property.
- The Finance Act 2003 text supplied with this page is recorded as current only to 17 November 2025.
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 sale agreement and any price allocation schedule.
- A list and valuation of the land, fixtures, fittings and movable items.
- Financial information showing the value of the business as a going concern.
- A valuation report explaining any separate goodwill or other intangible asset value.
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 and goodwill when buying a business property [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 42 - stamp duty land tax charge on land transactions https://www.legislation.gov.uk/ukpga/2003/14/section/42/2025-11-17 - FA 2003 section 43 - what counts as a land transaction https://www.legislation.gov.uk/ukpga/2003/14/section/43/2025-11-17 - FA 2003 section 43 - what is included in the land bought https://www.legislation.gov.uk/ukpga/2003/14/section/43/2025-11-17 - FA 2003 section 48 - interests and rights in land within SDLT https://www.legislation.gov.uk/ukpga/2003/14/section/48/2025-11-17 - FA 2003 section 50 - rules for working out the amount paid https://www.legislation.gov.uk/ukpga/2003/14/section/50/2025-11-17 - FA 2003 Schedule 4 para 1 - money or value given for the land https://www.legislation.gov.uk/ukpga/2003/14/schedule/4/paragraph/1/2025-11-17 - FA 2003 Schedule 4 para 4 - fairly splitting a price between different matters https://www.legislation.gov.uk/ukpga/2003/14/schedule/4/paragraph/4/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm04005 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 - The supplied material does not give a complete test for telling land-based goodwill from separate business goodwill. - The supplied material does not set a valuation method for a particular business or property. - The Finance Act 2003 text supplied with this page is recorded as current only to 17 November 2025. 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 and goodwill when buying a business property
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