Stamp duty when you pay most of the price before completion
When SDLT can arise before completion
Paying most of the agreed amount can make a property contract substantially performed before completion. Rent has separate rules: the first rent payment may be enough.
- Check payments as well as completion day
- Separate rent from other payments
- Treat HMRC’s 90% benchmark as guidance, not statutory wording
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty when you pay most of the price before completion
A reason is that, before completion, you have already paid most of the amount that the contract requires you to pay, which can bring the key SDLT date forward even though the legal transfer has not yet happened. Completion may still be outstanding.
What this rule is about
Most people expect SDLT to follow completion day. Usually, that is how a contract and the final transfer are treated. But the law has a different result if the contract has been substantially performed first.
In plain terms, the law can treat the contract as the property transaction before completion. The key date then becomes the date of substantial performance. Paying a substantial amount is one route to that result.
This matters because the timing of SDLT may change. Lease payments can matter earlier than expected.
What the official source says
Section 44 of the Finance Act 2003 says a contract is substantially performed if a substantial amount of the amount due under it is paid or provided. It sets different timing rules depending on whether rent is part of the deal.
According to HMRC’s manual, “substantially the whole” will normally mean at least 90% of the total amount due. That percentage is HMRC guidance, rather than a number written into the Act.
- If no part of the payment is rent, the test is met when all, or substantially all, of the amount is paid or provided.
- If rent is the only payment, the first rent payment triggers substantial performance.
- If there is both rent and another payment, either event can trigger the rule.
- In a mixed deal, paying all or substantially all of the non-rent amount can trigger the rule.
- For that same mixed deal, making the first rent payment can trigger it first.
- Whichever of those two events happens earlier is the important one.
What this means in practice
Do not look only at the completion date. If you pay a large deposit, an advance premium, or another major sum before then, check whether it is enough to make the contract substantially performed.
Rent needs special care. The first rent payment can trigger it. That can feel surprising, but it is how the statutory test works.
- Keep a clear record of the date each payment was made.
- Check whether each payment is rent or another type of payment.
- Read the contract rather than relying on a payment label.
- Check if a later contract variation changes what is due and when.
- For a lease, identify the first actual rent payment.
How to analyse it
Begin with the contract and the money, rather than assuming that completion provides the answer. Identify amounts due and amounts paid.
- First, establish that there is a contract for a land transaction that will be completed by a transfer.
- List every amount due under that contract.
- Separate rent from premiums, deposits and other payments.
- Identify the date each sum was paid or otherwise provided.
- If there is no rent, compare the amount paid with the total amount due.
- If rent is the only payment, identify the first rent payment.
- If there is rent and another payment, identify which trigger happened first.
- Consider whether an unusual deferred payment means the whole amount was paid in substance.
Example
Imagine Priya agrees to buy a property with a market value of £10 million. Her contract states a total price of £15 million. She pays £10 million now, while the remaining £5 million is not due for 99 years.
Priya paid under 90% of £15 million. However, HMRC’s manual gives this type of arrangement as an example where, in substance, the whole amount may have been paid or provided. The long delay may mean the later £5 million has little real value in the deal.
That does not make every long-deferred payment the same. The contract terms and the commercial facts still matter.
Why this can be difficult in practice
The hard part is often not adding up payments. The hard part is defining the amount due. Unpaid balances may lack real substance.
You might think that paying less than 90% always avoids this rule. HMRC says facts may show full payment.
- A sum called a deposit may still count towards the amount paid.
- Rent and a premium must not be treated as the same type of payment.
- A deferred amount may need closer review if it is due far in the future.
- The contract, side agreements and payment dates may all affect the answer.
- HMRC’s 90% view is useful guidance, but it is not a fixed statutory safe line.
Key takeaways
- Paying most of the agreed amount can trigger SDLT before completion.
- The first rent payment can trigger the rule where rent is involved.
- The 90% benchmark is HMRC guidance and may not settle unusual cases.
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 44 — early performance makes the contract the land transaction; substantial payment can amount to substantial performance; payment rules where rent forms all or part
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 Act does not give a fixed percentage for ‘substantially the whole’. HMRC’s 90% approach is its published view, but the facts may mean that a lower payment counts as the whole amount in substance.
- Whether a very late deferred payment has real commercial value can be fact-sensitive.
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 any variations
- A schedule showing each payment and its due date
- Lease terms and evidence of the first rent payment, where relevant
- Evidence explaining the value and commercial effect of any deferred sum
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 when you pay most of the price before completion [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 44 - early performance makes the contract the land transaction https://www.legislation.gov.uk/ukpga/2003/14/section/44/2025-11-17 - FA 2003 section 44 - substantial payment can amount to substantial performance https://www.legislation.gov.uk/ukpga/2003/14/section/44/2025-11-17 - FA 2003 section 44 - payment rules where rent forms all or part https://www.legislation.gov.uk/ukpga/2003/14/section/44/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm07950 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 Act does not give a fixed percentage for 'substantially the whole'. HMRC's 90% approach is its published view, but the facts may mean that a lower payment counts as the whole amount in substance. - Whether a very late deferred payment has real commercial value can be fact-sensitive. 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 when you pay most of the price before completion
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