Guidance on Chargeable Consideration for Land and Buildings Transaction Tax

LBTT: what counts as chargeable consideration

For Scottish LBTT, chargeable consideration is the total value given for the property, not just the price stated in the contract. It can include cash, VAT, non-cash items, services, debt, deferred payments, and value provided directly or indirectly by the buyer or a connected person. The rules focus on the real substance of the deal, so mixed or linked arrangements may need to be split on a just and reasonable basis.

• Chargeable consideration includes anything given in money or money’s worth for the land or property interest being bought.
• Items that form part of the property, such as buildings and fitted kitchen or bathroom items, are included, but moveable items like freestanding furniture, carpets, and curtains are not.
• VAT charged by the effective date counts, and deferred payments are included at their full agreed amount with no discount for paying later.
• Non-cash consideration is usually valued at market value on the effective date, and foreign currency amounts must be converted into sterling using the London closing exchange rate on that date.
• If one price covers land and other items, or more than one transaction, the total must be apportioned on a just and reasonable basis, with substance taking priority over labels or separate contracts.
• Special care is needed for services, debt, grants, employment-related sales, leases, linked transactions, and other cases where specific LBTT rules may apply.

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LBTT: what counts as chargeable consideration

This page explains what counts as “chargeable consideration” for Land and Buildings Transaction Tax in Scotland. In simple terms, this is the value on which LBTT is charged. It is not limited to the cash price written in the contract. It can include other payments, benefits, VAT, non-cash items, and amounts provided indirectly by the buyer or by someone connected with the buyer.

What this rule is about

LBTT is charged by reference to the chargeable consideration for a land transaction. The key question is: what is the buyer giving, in money or money’s worth, for the land or property interest being acquired?

The legislation takes a broad approach. It looks beyond the headline purchase price and asks what is really being given for the subject-matter of the transaction. That matters because the LBTT calculation depends on the total chargeable consideration, not just the amount described as the price.

For a straightforward purchase of a house, the answer is often simple: the chargeable consideration will usually match the price shown in the disposition and the registration application. But where the deal includes VAT, delayed payments, non-cash consideration, services, or a package of assets and arrangements, the analysis becomes more involved.

What the official source says

The guidance states that chargeable consideration includes anything given in money or money’s worth for the subject-matter of the transaction, whether given directly or indirectly by the buyer or by a connected party.

It also highlights a number of specific rules:

• Items forming part of the land or property are included. This can include houses, farm buildings, fixtures and fittings such as bathroom and kitchen fittings.
• Moveable assets are not part of the land for this purpose. The guidance gives examples such as freestanding furniture, carpets and curtains.
• Trees growing in the soil, and fruit growing on them, are treated as part of the land. By contrast, annual crops, felled timber, and plants or trees in free-standing pots are not.
• VAT charged on the transaction is included in chargeable consideration.
• If the seller could have charged VAT but had not actually opted to do so by the effective date, VAT that only becomes payable later does not count as chargeable consideration.
• If consideration is paid later, the agreed amount is still taken into account in full. There is no discount for deferred payment.
• If total consideration relates partly to the land transaction and partly to something else, or to more than one transaction, it must be apportioned on a just and reasonable basis.
• Where there is in substance one overall bargain, the legislation looks at the substance of the arrangement, even if the parties try to split it into separate prices or separate transactions.
• Non-monetary consideration, and debt as consideration, is generally valued at market value at the effective date unless a different rule applies.
• Foreign currency consideration must be converted into sterling using the London closing exchange rate on the effective date.
• If consideration consists of services, the value is generally what it would cost on the open market to obtain those services, subject to a special rule for certain public or education body arrangements.
• If the seller is the buyer’s employer, or the employer of someone connected with the buyer, and the transaction is entered into because of that employment, the chargeable consideration cannot be less than market value at the effective date.

The guidance also points to separate rules for leases, exchanges, debt, works, contingent or uncertain consideration, annuities, connected company transactions, and linked transactions.

What this means in practice

The practical point is that LBTT can apply to more than the amount transferred through the solicitor’s client account.

You should start by identifying everything the buyer is giving in return for the property interest. That includes not only cash but anything else of value. If a connected person is providing part of the value, that can still count. If part of the deal is dressed up as payment for something separate, that does not settle the matter. The legislation may require the whole arrangement to be looked at as one bargain.

This is especially important where:

• the contract includes land and non-land items together;
• there is a side agreement;
• the buyer is taking on an obligation or providing something other than money;
• the seller is connected with the buyer or is the buyer’s employer;
• part of the price is funded by a grant or assistance scheme;
• the transaction is priced in a foreign currency;
• payment is deferred.

The guidance also makes a practical point about grants and assistance schemes. Even if another person or scheme covers part of the price or part of the tax, the buyer remains ultimately responsible for the LBTT due on the total chargeable consideration. The buyer therefore needs to understand the terms of any support arrangement and not assume that outside funding changes the tax analysis.

How to analyse it

A sensible way to approach the issue is to work through these questions.

1. What is the subject-matter of the transaction?

   Identify the land or property interest being acquired. Then ask what is being given for that acquisition.

2. What is the buyer, or a connected person, providing?

   Look beyond the stated purchase price. Consider cash, assumption of obligations, non-cash assets, services, debt, or anything else of value.

3. Does the amount include items that form part of the land?

   Fixtures and fittings that are part of the property are included. Moveable items are not. In rural transactions, distinguish between things attached to or growing in the land and things that are separate from it.

4. Is VAT chargeable by the effective date?

   If VAT is chargeable in respect of the transaction, it forms part of chargeable consideration. If the seller had not actually opted to charge VAT by the effective date, later VAT may fall outside the chargeable consideration under the rule described in the guidance.

5. Is any part of the consideration deferred?

   If so, use the agreed amount. Do not reduce it because payment is made later.

6. Does the deal need apportionment?

   If one amount covers more than one land transaction, or covers both the land transaction and something else, apportion the total on a just and reasonable basis.

7. Is there really one overall bargain?

   If the commercial reality is a single deal, the legislation can treat the consideration as attributable across the whole bargain even where the parties have used separate contracts or separate price labels.

8. Is any consideration non-monetary or in foreign currency?

   Non-cash consideration is generally taken at market value at the effective date. Foreign currency amounts must be translated into sterling at the London closing exchange rate on that date.

9. Are any special rules triggered?

   Check whether the transaction involves services, works, debt, contingent consideration, annuities, exchanges, linked transactions, leases, or an employment-related sale. Those areas have additional rules.

Example

Illustration: a buyer agrees to acquire a rural property for a stated sum. The package includes the farmhouse, fixed kitchen and bathroom fittings, farm buildings, growing orchard trees, and some freestanding furniture. Part of the price is payable six months after completion.

On the guidance summarised here, the farmhouse, buildings, fitted items, and trees growing in the soil form part of the land or property and are within chargeable consideration. The freestanding furniture does not. The deferred amount is still counted at its full agreed amount, with no discount for late payment.

If the parties had tried to assign separate prices to the property and to another element of what is commercially one bargain, the legislation may still require a just and reasonable apportionment based on the substance of the arrangement.

Why this can be difficult in practice

The hardest cases are usually not about the basic rule, but about classification and valuation.

One difficulty is deciding whether an item forms part of the land or is a separate moveable asset. The guidance gives some examples, but real transactions can contain mixed bundles of assets.

Another difficulty is identifying when separate contracts are really part of one overall bargain. The legislation is aimed at substance, not just form, so labels used by the parties are not conclusive.

Valuing non-cash consideration can also be sensitive. Market value at the effective date may not be obvious, especially where the buyer is providing services or assuming obligations.

VAT can create timing issues. The rule depends on whether VAT was actually chargeable by the effective date, not simply whether the seller might later choose to bring VAT into play.

Employment-related transactions need particular care. The guidance says that where the transaction is entered into by reason of employment, the chargeable consideration cannot be less than market value. Whether a sale is sufficiently connected with employment may depend on the facts.

Finally, this page is only part of the wider LBTT framework. Some transactions that look simple at first may actually fall under more specific rules for leases, debt, works, exchanges, uncertain consideration, connected companies, or linked transactions.

Key takeaways

• Chargeable consideration for LBTT is broader than the headline purchase price and can include money, money’s worth, VAT, and value provided indirectly.
• Where a deal includes mixed elements or multiple transactions, the total may need to be apportioned on a just and reasonable basis, with substance taking priority over labels.
• Deferred, non-cash, foreign currency, service-based, and employment-related arrangements all have specific rules that can affect the LBTT calculation.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guidance on Chargeable Consideration for Land and Buildings Transaction Tax

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