Stamp duty and promises to cover the seller’s land liabilities
In short
A buyer’s qualifying promise to protect the seller from a third-party land liability is not added to the amount counted for SDLT.
- The seller’s obligation must relate to the land.
- The claim must be from a third party.
- Contract wording and facts are vital.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty and promises to cover the seller’s land liabilities
Stamp duty and promises to cover the seller’s land liabilities
A promise to cover certain debts of the seller does not always increase your stamp duty land tax bill, because the key question is whether it protects the seller from a third-party claim linked to the seller’s obligations over the land.
That distinction matters.
What this rule is about
Usually, SDLT counts everything of value you give to get the property, not just the cash price. However, a specific exception covers a qualifying promise to protect the seller from a liability.
It can matter where the property is let or has ongoing contract duties.
What the official source says
HMRC’s manual says that an indemnity for ongoing land liabilities, including lease duties, does not count towards the amount paid for SDLT when it meets the legislation’s limits.
The legislation sets those limits.
- You must agree to protect the seller.
- The liability must be owed to a third party.
- It must arise from the seller breaking an obligation linked to the land.
- A payment made under that agreement is also excluded.
What this means in practice
Do not add a qualifying indemnity to the property price when working out the amount paid for SDLT, but do not assume that every promise to meet a cost falls outside the calculation.
The wording matters.
- Read the contract wording, not its label.
- Check who could make the claim.
- Check why the seller could be responsible.
How to analyse it
Ask what the clause really does: does it protect the seller against a possible claim from someone else, or does it form another part of the deal’s price?
Start with the promise.
- Identify the promise made by the buyer.
- Identify the third party who may claim.
- Find the seller’s relevant obligation.
- Check whether the possible claim flows from a breach of it.
Example
Mia buys a leasehold shop for £250,000 and agrees to repay the seller if a landlord claims from the seller because of a lease obligation linked to the shop; if that agreement meets the statutory conditions, neither the promise nor a later payment under it adds to the £250,000 amount counted for SDLT.
It stays excluded.
Why this can be difficult in practice
This is the part people get wrong: calling a payment an indemnity does not settle the issue, because the real legal effect and the route of the liability matter.
Labels do not decide it.
- A direct payment to the seller may be part of the price instead.
- Not every future cost relates to the seller’s breach.
- Lease wording can affect who owes what and when.
Key takeaways
- A qualifying indemnity does not increase the SDLT amount.
- The third-party claim must link to the seller’s land obligation.
- Keep the contract and supporting documents.
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 Schedule 4 para 1 — what normally counts as the amount paid
- FA 2003 Schedule 4 para 16 — buyer indemnities for the seller’s land obligations
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
- It can be unclear whether a contract term is a true indemnity or is part of the price for the property.
- The facts may not show clearly whether the liability is owed to a third party and arises from the seller’s obligation relating to the land.
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 contract and any separate indemnity agreement
- The clause that creates the seller’s obligation
- Details of the third party and the claimed liability
- Records of any payment made under the indemnity
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 promises to cover the seller’s land liabilities [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 Schedule 4 para 1 - what normally counts as the amount paid https://www.legislation.gov.uk/ukpga/2003/14/schedule/4/paragraph/1/2025-11-17 - FA 2003 Schedule 4 para 16 - buyer indemnities for the seller's land obligations https://www.legislation.gov.uk/ukpga/2003/14/schedule/4/paragraph/16/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm04120 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 - It can be unclear whether a contract term is a true indemnity or is part of the price for the property. - The facts may not show clearly whether the liability is owed to a third party and arises from the seller's obligation relating to the land. 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 promises to cover the seller’s land liabilities
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