Understanding Chargeable Consideration and Deferred Stamp Duty Land Tax Payments

SDLT and Contingent Purchase Prices

Where part of the price for land is only payable if a future event happens, such as planning permission being granted, that contingent amount is still normally included in the SDLT calculation from the start. It counts as chargeable consideration even if the payment may never actually become due, although there may be limited scope to defer payment of the tax in some cases.

• Contingent consideration includes overage, clawback, or other extra payments linked to future events such as planning permission, development, or increased value.
• For SDLT, you do not usually look only at the amount paid on completion; you must also include contingent sums that form part of the contract price.
• In the example given, land bought for £10 million plus a further £5 million if planning permission is obtained within 5 years has chargeable consideration of £15 million.
• The fact that the extra payment may never become payable does not stop it being counted for SDLT purposes at the outset.
• A buyer may be able to apply to defer payment of SDLT on the contingent element under Finance Act 2003 section 90, but this does not remove that amount from the SDLT calculation.
• In practice, contracts should be reviewed carefully to identify all contingent payments, including fixed sums, staged payments, formulas, and capped amounts.

Scroll down for the full analysis.

SDLT on contingent purchase price: planning permission payments count from the start

This page explains how SDLT treats part of the purchase price that is only payable if something happens later. In the example here, extra money is due only if planning permission is obtained. The key point is that contingent consideration is still counted as chargeable consideration when SDLT is worked out, even though the payment may never become due.

What this rule is about

Some land deals include an upfront price plus an additional amount that depends on a future event. A common example is an “overage” or “clawback” payment linked to planning permission, development, or future value.

The legal issue is whether SDLT is charged only on the amount definitely payable at completion, or also on the extra amount that will be payable only if the future event occurs.

The source material addresses contingent consideration. This means consideration that depends on something uncertain happening in the future.

What the official source says

The official example says that where a buyer agrees to pay £10 million for land, plus a further £5 million if planning permission is obtained within 5 years, the chargeable consideration for SDLT is £15 million.

In other words, the contingent amount is included in the SDLT calculation from the outset. It is not ignored just because the trigger event may never happen.

The source also says the buyer may apply to defer payment of SDLT under Finance Act 2003 section 90. That does not change the amount treated as chargeable consideration. It is about deferring payment in the circumstances allowed by the legislation.

What this means in practice

If a land contract includes a future payment that is contingent, you do not usually calculate SDLT only on the fixed price paid on completion. You must also consider the maximum contingent amount that forms part of the consideration under the contract.

In the example, the buyer pays SDLT by reference to £15 million, not £10 million, even though the extra £5 million is only payable if planning permission is obtained within 5 years.

This matters because contingent payments are common in development land transactions. Buyers sometimes assume SDLT can wait until the contingency is resolved. The example shows that this is not the starting position. The contingent amount is brought into charge at the beginning.

The possible ability to defer payment may help cash flow, but it is a separate point. It does not mean the contingent amount falls outside SDLT.

How to analyse it

When reviewing a land transaction, ask these questions:

• Is there any part of the price that depends on a future event?
• Is that future payment part of the consideration for the land under the contract?
• What is the amount of that contingent payment as stated in the agreement?
• Does the contract set a fixed contingent sum, a formula, or a cap?
• Is there scope to apply for deferral of SDLT payment under the relevant rules?

The practical exercise is to identify all amounts that form part of the consideration, including amounts that are not yet payable because they depend on a future event.

In development transactions, this often requires careful reading of overage clauses, planning uplift provisions, and deferred payment mechanics. Labels do not decide the issue. What matters is whether the payment is part of what the buyer gives for the land.

Example

Illustration: A developer buys a site for £10 million. The contract says a further £5 million is payable if planning permission for residential development is granted within 5 years. On completion, planning permission has not yet been obtained and may never be obtained.

On the official example, the chargeable consideration for SDLT is still £15 million. The buyer may be able to apply to defer payment of SDLT on the contingent element, but the contingent £5 million is not left out of the SDLT computation.

Why this can be difficult in practice

The example is simple, but real contracts are often more complicated. The contingent amount may depend on a formula, may be payable in stages, or may vary depending on the type of planning permission obtained. In those cases, identifying the amount to bring into account can be less straightforward.

Another difficulty is that parties may focus on commercial uncertainty and assume tax follows the cash flow. SDLT does not necessarily work that way. A payment can be contingent in commercial terms but still count as chargeable consideration from the start.

It is also important to keep separate two different questions: first, what amount counts as chargeable consideration; second, whether payment of SDLT can be deferred. The source confirms that the contingent amount is included in chargeable consideration, while deferral is dealt with under a different provision.

Key takeaways

• A contingent payment for land can count towards SDLT even if it may never become payable.
• In the official example, £10 million plus a contingent £5 million gives chargeable consideration of £15 million.
• A possible deferral of SDLT payment does not alter the fact that the contingent amount is included in the SDLT calculation.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Understanding Chargeable Consideration and Deferred Stamp Duty Land Tax Payments

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