Read the original guidance here:
HMRC SDLT: SDLTM50900A – Procedure: deferring payment in case of contingent or uncertain consideration FA03/S90: when application may be made: examples

Deferring Stamp Duty Land Tax Payment for Uncertain Consideration

This article explains how buyers can defer paying Stamp Duty Land Tax (SDLT) when the total payment for a property isn’t certain. The relevant law for this process is found in FA03/S90, which lays out the circumstances under which a buyer can postpone their SDLT payment.

Key Concepts

• Contingent Consideration: This refers to payments that depend on future events, such as obtaining planning permission.
• Relevant Event: This is an event that triggers a change in what the buyer owes, such as receiving planning permission.
• SDLT Return: This is a form that must be submitted to HMRC detailing the amount of SDLT due and must be filed within a specific period.

Application Process

When a buyer believes that part of their payment is contingent (uncertain), they can apply to defer payment. The application is usually made through the SDLT forms and should include details of the transaction and the reason for deferral.

Examples of Deferral

Example 1

In January 2021, a buyer purchases a piece of land for an initial upfront payment of £350,000. The buyer has plans to pay an additional £50,000 for each set of 50 houses, but they are not guaranteed to get planning permission for the full number of houses they expect, which is 200.

The buyer applies for deferral of the tax payment because the total amount payable is uncertain. Their application is successful. Under the regulations outlined in Part 4 of the Stamp Duty Land Tax (Administration) Regulations 2003, obtaining planning permission is considered the relevant event.

The buyer does owe SDLT on the initial payment of £350,000, as this amount has been confirmed and paid. The SDLT calculation for this initial payment is as follows:

Charge	SDLT due
0% on the first £150,000 =	£0
2% on the next £100,000 =	£2,000
5% on the remainder =	£5,000
Total SDLT due =	£7,000

Later, the buyer indeed receives planning permission for 200 houses and pays an additional £200,000. Additional SDLT is due based on this new total consideration:

Charge	SDLT due
0% on the first £150,000 =	£0
2% on the next £100,000 =	£2,000
5% on the remainder =	£15,000
Total SDLT due =	£17,000

From the previous payment of £7,000, the new SDLT owed after considering what has already been paid amounts to:

Further SDLT now due (£17,000 – £7,000) =

£10,000

Example 2

This scenario is similar to the first, but the initial payment made by the buyer is £100,000. The buyer will also pay £50,000 for each set of 50 homes but is also hoping for planning permission to build 200 houses.

As in the first example, the buyer successfully applies to defer tax payment based on the uncertainty of the total amount payable upon obtaining planning permission.

Initially, no SDLT arises because the buyer has only paid £100,000. The rest is deferred until the relevant event occurs.

Months later, the buyer acquires planning permission to build 300 houses and decides to pay another £300,000. The new total consideration for the property transaction is now:

Total consideration = £100,000 + £300,000 = £400,000

This total requires a further return to HMRC within 30 days of the relevant event. The new SDLT due is calculated as follows:

Charge	SDLT due
0% on the first £150,000 =	£0
2% on the next £100,000 =	£2,000
5% on the remainder =	£7,500
Total SDLT due =	£9,500

This example illustrates how buyers can navigate deferring SDLT payments when the final payment is uncertain. It highlights the importance of understanding contingent considerations and filing returns in a timely manner.