Guidance on Deferring LBTT Payment for Contingent or Uncertain Consideration

LBTT deferral for contingent or uncertain purchase price

A buyer may ask Revenue Scotland to delay paying the part of LBTT linked to a price element that is not fixed on the effective date, but only if strict conditions are met. The buyer must still file the initial LBTT return, calculate tax using the full transaction value, and later file a further return and pay the deferred tax when the amount becomes certain or ascertainable.

• Deferral is only available where part of the chargeable consideration is genuinely contingent or uncertain and may become payable more than 6 months after the effective date.
• Deferral is not available for rent, for amounts payable within 6 months, or where the amount is already ascertainable even if paid later.
• LBTT must be calculated on the total consideration first, then apportioned between the amount payable now and the amount that can be deferred.
• The buyer must apply using Revenue Scotland’s deferral form and provide details of the transaction, the uncertain amount, the reason for the uncertainty, and expected timing.
• If deferral is granted, the initial return still shows the full consideration, but only the non-deferred tax is paid at that stage.
• When the contingency is resolved, a further return must be filed within 30 days and the deferred LBTT must be paid; Revenue Scotland may refuse deferral, including where it considers there are artificial tax avoidance arrangements.

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LBTT deferral where part of the price is contingent or uncertain

This page explains when a buyer can ask Revenue Scotland to defer payment of Land and Buildings Transaction Tax (LBTT) because part of the consideration is not yet fixed or depends on a future event. The point matters because LBTT is normally calculated by reference to the whole chargeable consideration, but in some cases the tax on a contingent or uncertain part can be paid later if the statutory conditions are met.

What this rule is about

Some land transactions do not have a fully fixed price on the effective date. A common example is where extra consideration becomes payable only if planning permission is granted, development milestones are met, or another future event happens.

Scottish LBTT law allows a buyer to apply to defer payment of the tax attributable to that contingent or uncertain amount, but only in limited circumstances. This is not a general right to delay LBTT. It applies only where the amount of tax depends on consideration that is contingent or uncertain at the effective date and the amount will, or may, become payable more than 6 months after that date.

The legislation referred to by Revenue Scotland is section 41 of the Land and Buildings Transaction Tax (Scotland) Act 2013 and the Land and Buildings Transaction Tax (Administration) (Scotland) Regulations 2014.

What the official source says

Revenue Scotland says a buyer may apply to defer all or part of the LBTT payable if both of these conditions are met:

• the tax depends on chargeable consideration that is contingent or uncertain at the effective date of the transaction; and
• that amount becomes payable, or may become payable, more than 6 months after the effective date.

A deferral is not available:

• for rent;
• if the contingent or uncertain amount is payable within 6 months of the effective date; or
• if the consideration is ascertainable.

The buyer must still file an LBTT return. Deferral does not remove the obligation to pay LBTT on any consideration that is already paid or provided, or that is not contingent and is already ascertained or ascertainable.

The application must be made using Revenue Scotland’s deferral application form and must include detailed information, including:

• the transaction reference number, if a return has already been submitted;
• the effective date;
• the buyer’s identity and correspondence address;
• the location of the land;
• the certain consideration;
• the amount for which deferral is sought;
• a reasoned view on when the amount will stop being contingent or will become ascertainable;
• the total chargeable consideration;
• the LBTT due on that total consideration;
• the amount of LBTT for which payment is to be deferred;
• the nature of the contingency or uncertainty; and
• as much detail as possible about expected payment timings.

Revenue Scotland may ask for more information and may refuse the application if the information is not provided.

If the application is accepted, Revenue Scotland will issue a notice stating the terms of acceptance, including the tax payable with the initial return and the nature and dates of any relevant event. A relevant event is an event on which all or part of the consideration ceases to be contingent or becomes certain.

If the application is refused, Revenue Scotland must notify the buyer, explain why, and state the tax due as a result of the refusal. The refusal notice is treated as a tax assessment, and interest runs from the date of the notice until payment is made.

Revenue Scotland also says it may refuse a deferral application if the transaction involves artificial tax avoidance arrangements within Part 5 of the Revenue Scotland and Tax Powers Act 2014.

What this means in practice

The important practical point is that deferral affects timing of payment, not the underlying tax calculation method.

Revenue Scotland’s guidance says you must calculate LBTT using the total consideration, including both the certain and contingent parts. You then apportion the total LBTT liability between:

• the amount payable now on the certain consideration; and
• the amount payable later on the contingent or uncertain consideration.

This means you do not calculate LBTT separately on the fixed part and the contingent part as if they were independent sums. Revenue Scotland expressly warns that doing so would produce too little tax and could lead to penalties.

In practice, that matters most where the total price pushes the transaction further into the relevant LBTT rate bands. The deferred element may therefore bear part of the tax generated by the whole transaction value.

If the application is accepted:

• the buyer still files the initial return;
• the initial return includes the full total consideration;
• the return is adjusted so that the tax shown as payable at that stage is only the non-deferred amount; and
• a further return is required when the contingent amount becomes fixed or ascertainable.

Revenue Scotland’s current guidance also contains system-specific instructions for its online return system. In particular, it says there are issues with the deferral process working alongside SETS, so manual adjustments may be needed on the return. The guidance explains how Revenue Scotland expects those adjustments to be made.

How to analyse it

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

First, is there genuinely contingent or uncertain consideration?

You need to identify whether some part of the price depends on a future event or cannot yet be ascertained. If the amount is already ascertainable, deferral is not available even if payment happens later.

Second, when might that amount become payable?

The rule only helps if the contingent or uncertain amount becomes payable, or may become payable, more than 6 months after the effective date. If the amount is due within 6 months, the statutory gateway is not met.

Third, does the amount relate to chargeable consideration other than rent?

Revenue Scotland says deferral is not available where the consideration consists of rent.

Fourth, what is the total chargeable consideration for LBTT purposes?

The initial calculation must be based on the total consideration, including both fixed and contingent elements. This is the starting point for working out how much LBTT is attributable to the deferred part.

Fifth, what amount is payable now and what amount is to be deferred?

Using Revenue Scotland’s approach, the total LBTT on the total consideration is apportioned between the certain and contingent parts. The initial return should reflect only the amount currently payable, while preserving the full transaction value in the relevant consideration fields.

Sixth, what evidence supports the application?

The application needs enough detail to show:

• what the contingency or uncertainty is;
• why the amount cannot yet be fixed;
• when it is expected to become fixed or payable; and
• how the deferred LBTT amount has been calculated.

Seventh, what happens when the contingency is resolved?

Once the amount ceases to be contingent or becomes ascertainable, a further return must be filed within 30 days and the deferred tax must be paid at the same time.

Example

This example follows Revenue Scotland’s own illustration.

A developer buys land for an initial fixed price of £350,000. The contract also provides for an extra £50,000 for each set of 50 houses for which planning permission is granted within 2 years after the effective date. The buyer expects planning permission for 200 houses, so the contingent consideration is £200,000. Total consideration is therefore £550,000.

Revenue Scotland’s example uses the non-residential LBTT rates and bands in force on 1 April 2024. On total consideration of £550,000, the total LBTT is £16,000.

That total tax is then apportioned:

• certain consideration: £350,000 ÷ £550,000 × £16,000 = £10,182;
• contingent consideration: £200,000 ÷ £550,000 × £16,000 = £5,818.

On the initial return:

• the total consideration and total chargeable consideration are both shown as £550,000;
• the buyer includes the deferral reference if available; and
• the tax payable is manually adjusted so that only £10,182 is payable at that stage.

If planning permission for the 200 houses is later granted, the contingent consideration becomes certain. The buyer must then file a further return within 30 days and pay the deferred £5,818. Revenue Scotland says that further return should be linked to the original return.

Why this can be difficult in practice

The main difficulty is distinguishing between consideration that is truly contingent or uncertain and consideration that is already ascertainable. That can be a fine legal distinction. A price may be payable in the future but still be sufficiently fixed now, in which case deferral may not be available.

Another practical difficulty is that the return process does not simply mirror the legal concept. Revenue Scotland’s guidance acknowledges system issues and requires manual adjustments. That means the legal position and the way the figures are entered on the online system are not always intuitive.

There is also scope for error in the tax calculation. Revenue Scotland’s guidance is clear that the total LBTT must first be calculated on the total consideration and then apportioned. If someone instead calculates LBTT separately on the fixed and contingent amounts, the tax shown will be too low.

Timing can also be sensitive. The buyer must identify when the relevant event occurs, because the further return is due within 30 days of the amount becoming certain or known. In some transactions, it may not be obvious exactly when that point is reached.

Finally, the guidance says Revenue Scotland may refuse deferral where artificial tax avoidance arrangements are involved. That means the factual and commercial context may matter, not just the wording of the payment clause.

Key takeaways

• LBTT deferral is only available for contingent or uncertain consideration that becomes payable, or may become payable, more than 6 months after the effective date.
• The tax calculation starts with the total consideration for the transaction, not separate calculations for the fixed and contingent parts.
• The buyer must still file the initial return, and must file a further return within 30 days when the deferred amount becomes certain or ascertainable.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guidance on Deferring LBTT Payment for Contingent or Uncertain Consideration

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