Calculating Chargeable Consideration for Foreign Currency Transactions in UK Sterling

SDLT on Property Bought in a Foreign Currency

When UK land is bought for a price in a currency other than pounds sterling, the amount must be converted into sterling before SDLT is calculated. The usual rule is to use the exchange rate on the effective date of the transaction, which is often completion, unless the parties have clearly used a different exchange rate as part of the transaction itself.

• SDLT is always worked out on the sterling value of the chargeable consideration.
• The default exchange rate is the rate on the effective date of the transaction, not usually the contract date or payment date.
• If the contract or transaction documents genuinely fix a different exchange rate for the deal, that rate may be used instead.
• Exchange rate movements before the effective date can change the sterling amount and the SDLT due.
• Care is needed where the effective date is earlier than completion, such as on substantial performance, or where only part of the price is in foreign currency.

Scroll down for the full analysis.

SDLT and foreign currency: how non-sterling consideration is converted into pounds

If land is bought and the consideration is expressed in a currency other than sterling, SDLT still has to be worked out in pounds. The key question is which exchange rate should be used. This matters because even small currency movements can affect the amount of chargeable consideration and therefore the SDLT due.

What this rule is about

SDLT is charged by reference to chargeable consideration. For UK land transactions, that amount must ultimately be identified in sterling so the tax can be calculated.

This rule deals with a simple but important point: where the buyer gives consideration in a foreign currency, the amount must be translated into pounds. The timing of that conversion can change the sterling figure, especially where exchange rates are moving.

What the official source says

The official material says that where consideration is in a currency other than sterling, the chargeable consideration is calculated by converting that amount into sterling on the effective date of the transaction.

It also says that a different exchange rate can be used if the parties use that different rate for the purposes of the transaction.

So the default position is:

• convert the foreign currency amount into sterling,
• use the exchange rate at the effective date of the transaction,
• unless the parties have used a different rate for the transaction itself.

What this means in practice

In most cases, the sterling amount for SDLT is not fixed by the date contracts are signed, the date a deposit is paid, or the date the money is transferred. The starting point is the effective date of the transaction.

For SDLT, the effective date is often completion, although in some cases it can be earlier, for example if there is substantial performance. The foreign currency amount is converted into sterling at that point unless the transaction itself uses another exchange rate.

The practical effect is that:

• the SDLT calculation may change if the exchange rate changes before the effective date,
• the amount shown in the contract in foreign currency is not enough on its own for SDLT purposes, and
• conveyancers and taxpayers should check whether the transaction documents adopt a specific exchange rate for the deal.

The reference to the parties using a different rate for the purposes of the transaction is important. If the contract or completion mechanics fix a particular conversion rate for the deal, that may be the rate used instead of the rate at the effective date. The source does not expand on how that must be evidenced, but in practice the contractual documentation and transaction records will matter.

How to analyse it

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

• Is any part of the chargeable consideration expressed in a non-sterling currency?
• What is the effective date of the transaction for SDLT purposes?
• Do the transaction documents use or fix a particular exchange rate for the purposes of the transaction?
• If so, is that rate genuinely the rate used for the transaction, rather than a figure mentioned for some other purpose?
• Once the correct sterling figure is identified, how does that affect the SDLT calculation?

This is not a separate relief or special regime. It is a valuation and calculation rule. Its role is simply to identify the sterling amount on which SDLT is charged.

Example

Illustration: a buyer agrees to pay 500,000 euros for land in England. Completion is the effective date of the transaction. If the parties have not used a different exchange rate for the transaction, the 500,000 euros is converted into sterling using the exchange rate on that effective date, and SDLT is then calculated on the sterling amount.

If, however, the contract provides that the price is to be treated as a fixed sterling equivalent using a specified exchange rate for the transaction, the official material indicates that this different rate may be used instead.

Why this can be difficult in practice

The source states the core rule briefly, but some cases may still be fact-sensitive.

One difficulty is identifying the effective date. If the transaction is substantially performed before completion, the SDLT effective date may be earlier than the parties expect. That can change the exchange rate date and therefore the sterling amount.

Another difficulty is deciding whether the parties have in fact used a different rate for the purposes of the transaction. A contract may refer to an exchange rate for commercial discussions, accounting, or funding, without clearly making that rate part of the transaction pricing mechanism. The more clearly the documents show that a particular rate was actually used for the transaction, the easier the SDLT position is likely to be.

A further issue can arise where only part of the consideration is in foreign currency, or where consideration is adjusted after the effective date. In those situations, the wider SDLT rules on chargeable consideration and timing may also need to be considered alongside this currency conversion rule.

Key takeaways

• Foreign currency consideration must be converted into sterling for SDLT purposes.
• The default conversion date is the effective date of the transaction.
• A different exchange rate may be used if that is the rate the parties use for the transaction itself.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Calculating Chargeable Consideration for Foreign Currency Transactions in UK Sterling

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