Stamp duty where an extra land payment depends on planning permission
When a planning-based payment fails
A possible extra payment can be included in the stamp duty calculation even though it may never become due. If the planning condition fails, the buyer may claim back tax paid on that extra amount.
- Initial tax can use the full possible price
- A later failed condition can trigger a repayment claim
- Interest is payable on a tax repayment
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty where an extra land payment depends on planning permission
Stamp duty where an extra land payment depends on planning permission
If you agree to pay more for land only when planning permission is granted, you may still need to calculate stamp duty on the full possible price, even if permission never comes through. You may reclaim tax on the extra amount.
What this rule is about
Some land deals have a base price plus a later payment. That later payment might depend on planning permission, a sale, or another uncertain event.
You might assume stamp duty waits until the event happens. It does not. For a contingent payment, the law starts by assuming it will be paid.
What the official source says
HMRC gives an example in which a company buys land for £10 million and agrees to pay another £5 million if it obtains planning permission for an industrial park within five years.
- The possible extra £5 million depends on an uncertain future event.
- HMRC says stamp duty is worked out on the full £15 million.
- The company pays tax on that full amount and does not apply to defer payment.
- Five years later, planning permission has not been obtained.
- The £5 million is therefore not payable.
- HMRC says the company can claim back the tax paid on that £5 million.
The legislation initially treats a contingent payment as payable. Once the condition is resolved, the taxpayer can ask HMRC to reconsider the tax position.
What this means in practice
Your initial tax bill can exceed the price you finally pay. That can create a serious cash-flow issue when the possible later payment is large.
- Keep the contract clause that makes the payment conditional.
- Record the exact date when the planning condition is decided or expires.
- Keep proof that no extra payment became due.
- Compare the final price with the amount used on the original stamp duty return.
The law also allows an application to defer tax where a contingent or uncertain future payment is involved, but that route is available only if conditions are met.
One condition concerns timing. In particular, the contract must provide at least one possible payment date more than six months after the transaction’s effective date.
Check the dates.
How to analyse it
Ask what the contract really requires. Labels do not decide the issue. What matters is whether an uncertain event must happen before payment becomes due.
- Identify the fixed price and every possible extra payment.
- Read the condition that triggers, reduces, or cancels the payment.
- Decide whether the future event was uncertain when the deal took effect.
- Work out whether the event happened or became impossible.
- Check whether tax was paid on an amount that is no longer due.
This is the part people get wrong: a failed condition does not by itself rewrite the original contract price. You must use the statutory process to adjust the tax.
Example
Illustration: P Ltd buys a plot for £10 million. It will pay a further £5 million only if it obtains planning permission within five years. Stamp duty is initially worked out using £15 million. P Ltd pays that tax.
After five years, because P Ltd has not obtained permission within the period specified in the agreement, it does not owe the extra £5 million. It can claim repayment of the tax paid on that £5 million. Interest is payable on the repayment under the legislation.
Why this can be difficult in practice
The answer often turns on the contract wording and the evidence. A payment may be contingent, uncertain in amount, or simply due later. Those are not always the same thing.
- A delayed payment is not necessarily a conditional payment.
- Planning documents must show whether the condition failed or merely remains undecided.
- Linked deals may affect the overall tax calculation.
- The applicable stamp duty rates depend on the transaction date and the land type.
Key takeaways
- Stamp duty can include a possible later payment from day one.
- A failed planning condition can reduce the final taxable amount.
- Keep the contract and planning evidence for any repayment claim.
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 51 — valuing contingent and uncertain payments for stamp duty
- FA 2003 section 80 — adjusting tax when a contingency is resolved
- FA 2003 section 89 — interest on repayments of overpaid stamp duty
- FA 2003 section 90 — deferring tax on later contingent or uncertain payments
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 source does not give the transaction date. Rates, reliefs and the detailed process for a repayment cannot be confirmed from this example alone.
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 signed contract and clauses setting out the extra payment
- Evidence of the planning application and final outcome
- Dates showing when the five-year condition ended
- The original stamp duty return and proof of tax paid
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 where an extra land payment depends on planning permission [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 51 - valuing contingent and uncertain payments for stamp duty https://www.legislation.gov.uk/ukpga/2003/14/section/51/2025-11-17 - FA 2003 section 80 - adjusting tax when a contingency is resolved https://www.legislation.gov.uk/ukpga/2003/14/section/80/2025-11-17 - FA 2003 section 89 - interest on repayments of overpaid stamp duty https://www.legislation.gov.uk/ukpga/2003/14/section/89/2025-11-17 - FA 2003 section 90 - deferring tax on later contingent or uncertain payments https://www.legislation.gov.uk/ukpga/2003/14/section/90/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm05040a 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 source does not give the transaction date. Rates, reliefs and the detailed process for a repayment cannot be confirmed from this example alone. 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 where an extra land payment depends on planning permission
Search Land Tax Advice with Google
