HMRC SDLT: Guidance on Deferring SDLT Payment for Contingent or Uncertain Consideration
Deferring Stamp Duty Land Tax Payment for Contingent or Uncertain Consideration
Under certain conditions, a purchaser can apply to defer the payment of Stamp Duty Land Tax (SDLT) when the chargeable consideration is contingent or uncertain. This deferral is governed by FA03/S90 and must be applied for within 30 days of the transaction’s effective date. However, this deferral does not affect the obligation to pay SDLT on any known or non-contingent consideration. The deferral is not applicable for amounts that are ascertainable but not yet ascertained, and a best estimate should be used in such cases.
- Applications for deferral must be submitted within 30 days of the transaction’s effective date.
- Deferral applies to contingent or uncertain consideration payable more than six months after the transaction.
- SDLT must still be paid on any non-contingent or known consideration.
- Deferral is not available for amounts that are ascertainable but not yet ascertained.
- A best estimate should be used for the land transaction return if the amount is uncertain.
- Purchasers may make a payment on account to avoid interest on outstanding SDLT.
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Read the original guidance here:
HMRC SDLT: Guidance on Deferring SDLT Payment for Contingent or Uncertain Consideration
SDLTM50900 – Procedure for Deferring Stamp Duty Land Tax Payment Due to Uncertain Consideration
Understanding the Application for Deferring SDLT Payment
If you are buying land or property and part of the payment is uncertain or may not be paid for more than six months, you can apply to defer the Stamp Duty Land Tax (SDLT) you owe. This is covered under FA03/S90.
Key Terms
– Stamp Duty Land Tax (SDLT): A tax on land and property transactions in the UK.
– Contingent Consideration: This refers to payment that could depend on future events.
– Chargeable Consideration: The total amount the purchaser agrees to pay for the property, which is liable for SDLT.
When to Apply
You must submit your application to defer SDLT to the Stamp Office within 30 days of the effective date of your transaction. This date is when the purchase agreement takes effect.
What You Need to Know About Your Responsibilities
Even if you submit an application to defer payment, you still have to pay SDLT on the following:
– Any consideration that you have paid when you make the application
– Any consideration that will become payable within six months from the effective date
– Any fixed consideration known at the time of your application
Example of When You Might Apply to Defer Payment
Consider a situation where you purchase a property for £300,000, but part of the price (£50,000) is based on future conditions—such as reaching a certain planning permission or project completion. Since this £50,000 is uncertain, you could apply to defer SDLT on that amount, assuming it is payable after six months.
If the remaining £250,000 is due within six months or is known already, you have to pay SDLT on that portion when due.
Deferral Conditions
Deferral can apply even if part of the consideration is due before the six months if any uncertainty relates to the portion that is payable after that period.
When Deferral Is Not Available
Deferral is not an option if the uncertain consideration can be calculated, even if it hasn’t been calculated yet. In these cases, your SDLT return should reflect your best estimate of the purchase price.
When the final amount of consideration becomes clear, you will need to adjust your SDLT return. This can be done through a purchaser amendment as specified under FA03/SCH10/PARA6.
Making a Payment on Account
If you believe that interest might accrue on any overdue SDLT, you can make a payment on account to cover that expected liability.
Examples of Applications
To better understand when you can apply for deferring SDLT payments, look at examples detailed in SDLTM50900A.
Important Considerations
– Make sure your initial tax return is accurate based on known amounts to avoid penalties.
– Keep records and documentation to support any future adjustments you might need to make.
If you’re unsure about any aspect of deferring your SDLT payment, consult with a tax professional or reach out to HMRC for assistance.
Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: Guidance on Deferring SDLT Payment for Contingent or Uncertain Consideration
