Guidance on Non-Chargeable Consideration in Land Transactions for LBTT

LBTT: What Does Not Count as Chargeable Consideration?

For LBTT, tax is charged on the amount paid for the land or property interest, not on genuinely separate items included in the same deal. If part of the price relates to moveable goods or other non-land assets, that part can usually be left out, but only if the value used is fair, realistic and properly supported.

• Items that are separate from the land transaction, such as some moveable household goods or business assets, may be excluded from chargeable consideration.
• Any amount deducted must reflect fair market value, taking account of factors such as age, condition and quality.
• Fixtures and fittings are normally part of the property and cannot be excluded in the same way as loose moveable items.
• Where a business sale includes land as well as plant, machinery, stock or goodwill, the total price must be split on a just and reasonable basis.
• It is important to show the allocation clearly in the contract or completion papers and keep evidence in case the figures are challenged.

Scroll down for the full analysis.

LBTT: what does not count as chargeable consideration?

This page explains an important LBTT point: not everything included in a purchase price is necessarily taxed as consideration for the land. If part of the price is really for items outside the land transaction, that part can be left out when working out the chargeable consideration. The difficulty is making sure the amount excluded is properly valued and can be justified.

What this rule is about

LBTT is charged on the chargeable consideration for a land transaction. In straightforward cases, that is the amount paid for the land or buildings. But a sale contract may bundle other things into the same overall price.

The official guidance deals with items that are not part of the land transaction itself. Typical examples are moveable items sold with a home, or business assets sold alongside premises. If those items are genuinely separate from the land interest, their value is not included in the chargeable consideration for LBTT.

This matters because the tax is calculated on the land element, not on everything the buyer happens to acquire under the wider deal.

What the official source says

The guidance says that where the purchase price includes payment for items that are not part of the chargeable consideration, those items must be valued at a rate reflecting their fair market value. That value is then deducted from the total price paid to arrive at the chargeable consideration.

The example given is carpets sold with a home. The buyer and seller must agree a fair price for those carpets, taking account of their age and quality, and that amount is subtracted from the overall price. The guidance also makes an important distinction: fixtures and fittings do form part of the chargeable consideration, so they cannot simply be carved out in the same way.

The same approach applies where a business sale includes other assets such as plant and machinery, stock in trade, or goodwill. In those cases, the purchase price must be allocated between the land and the other assets on a just and reasonable basis.

The source also points to separate rules for certain other matters that are not included in chargeable consideration, including partition, cases where exemption conditions are not fully met, certain indemnities, and certain tax liabilities borne by the buyer.

What this means in practice

The practical question is whether part of the agreed price is really being paid for something other than the land interest. If it is, that part may be excluded from LBTT. But the allocation must reflect reality.

In practice, this means:

• you cannot simply choose a convenient figure to reduce LBTT
• the excluded amount should reflect fair market value
• the valuation should take account of the actual condition and age of the items
• if several assets are sold together, the split of the total price must be just and reasonable

For residential purchases, disputes often arise over loose items such as carpets, curtains, freestanding white goods, or furniture. The guidance supports excluding genuinely separate moveable items, but not fixtures and fittings that form part of the property.

For business transactions, the issue is often wider. A single deal may include land, plant, equipment, stock, and goodwill. LBTT applies to the land consideration, but not to the non-land assets merely because they are sold at the same time. The allocation still needs to be supportable.

How to analyse it

A sensible way to approach the issue is to ask the following questions:

• What exactly is being sold under the agreement?
• Which parts are land or rights connected with land?
• Which parts are separate moveable or intangible assets?
• Are any of the items actually fixtures or fittings that form part of the property?
• Has a fair market value been used for the non-land items?
• If there is a package deal, is the allocation between land and non-land assets just and reasonable?
• Is there enough evidence to support the figures used if they are later questioned?

It is usually sensible for the contract papers or completion statements to show the allocation clearly. The figures should match the commercial reality of the transaction rather than being inserted as an afterthought.

Example

A buyer agrees to pay a single total price for a house and certain loose items inside it, including carpets. If the carpets are genuinely separate items and the parties agree a price that reflects their real second-hand value, that amount can be deducted from the total price when calculating chargeable consideration for LBTT.

But if the parties try to allocate an inflated amount to those carpets, or try to treat fixtures and fittings as if they were separate moveable items, that would not follow the guidance. The amount excluded must reflect fair market value, and fixtures and fittings remain part of the chargeable consideration.

Why this can be difficult in practice

The main difficulty is classification. Not every item found in a property is treated the same way. The guidance expressly distinguishes carpets from fixtures and fittings, but real transactions can involve items that are harder to categorise.

Another difficulty is valuation. Fair market value is not necessarily the same as what the parties would like to write into the contract. Used domestic items may have a modest value even if they were expensive when new. In business sales, goodwill and plant may also require careful allocation.

There is also a judgement issue where a single overall price is negotiated commercially. The law allows a deduction for non-chargeable items, but the split must still be just and reasonable. That means the numbers should be capable of explanation by reference to the assets actually being transferred.

The source page is also only one part of the wider LBTT rules. It flags that other specific rules apply in particular situations, so this page should not be treated as a complete list of everything excluded from chargeable consideration.

Key takeaways

• LBTT is charged on the land consideration, not on genuinely separate non-land items included in the overall deal.
• Any amount excluded for moveable or intangible assets must reflect fair market value, or be allocated on a just and reasonable basis.
• Fixtures and fittings are treated differently and do form part of the chargeable consideration.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guidance on Non-Chargeable Consideration in Land Transactions for LBTT

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