How to calculate Land Transaction Tax you can defer
Deferring LTT on a future payment
You may ask WRA to defer tax linked to an unpaid payment whose amount or existence depends on the future. The request cannot exceed the result of the statutory four-step calculation.
- Include the future payment in the first full tax calculation.
- Exclude qualifying deferred consideration for the second calculation.
- The difference is the maximum that may be deferred.
Scroll down for the full analysis.
Read the original guidance here:
How to calculate Land Transaction Tax you can defer
If part of your property price depends on something that may happen later, you may be able to delay part of your Welsh Land Transaction Tax. This is not a discount on stamp duty. It only delays tax on a qualifying future payment, and only if WRA agrees.
What this rule is about
Some property deals have a fixed price plus an extra payment later. For example, a seller may receive more if planning permission is granted. That extra sum can change the Land Transaction Tax due on the deal.
You still work out tax using the whole price at first. You can then identify the part of that tax linked to the later payment. That is the maximum amount that may be deferred.
Why does this matter? A future payment may never become due, or its final amount may be unknown when you buy. Paying all the tax now can therefore mean paying tax on money you have not yet paid.
What the official source says
WRA’s guidance sets out a four-step calculation. Officially, the qualifying future part is called the deferred consideration. In everyday terms, it is an unpaid part of the price that meets every condition below.
- Work out the tax on the full price, including the uncertain payment.
- Identify the unpaid payment that is contingent or uncertain.
- Check that it is not rent.
- Check that it is not an annuity covered by the special annuity rule.
- Check that at least one possible payment date falls more than six months after the effective date, which is normally the date that fixes the tax position.
- Work out the tax again after taking that qualifying future payment out of the price.
- Subtract the second tax figure from the first figure.
This result is the deferrable amount. It is the ceiling, not a promise that WRA will defer that sum.
A request must accompany the first tax return by that return’s filing date, state the amount sought, show the calculation, explain why the payment is uncertain, and give an expected end date. All of this is required.
What this means in practice
Include it in the first return. Work out the full tax position with the uncertain payment included. This calculation then separates the tax linked to that payment.
Think of it as two tax calculations from the same deal: one with the full price, and one without the qualifying future sum. The gap between them is the amount that may be put off.
- Pay the tax that is not covered by an agreed deferral.
- Ask for no more than the calculated maximum.
- Keep the contract and evidence about the future payment.
- Record when the event happens, or when it becomes clear that it will not happen.
- Revisit the tax position when the final payment becomes known.
WRA guidance is not the law. For the legal calculation, see section 59 of the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017.
How to analyse it
Start with the deal documents, not the label used for the payment. Calling a sum an “earn-out” does not answer the question. Dependence on uncertainty is decisive. Ask whether an uncertain future event determines if the payment will be made or what its value will be.
- List every part of the price, including later payments.
- Identify the full price used for the first tax calculation.
- For each unpaid sum, ask whether a future event decides if it will be paid.
- If the payment will be made, ask whether an uncertain event decides its amount.
- Check whether any possible due date is more than six months after the effective date.
- Exclude rent and the annuities that section 21 covers.
- Calculate tax on the full price and then on the reduced price.
- Use the difference as the maximum possible request.
For linked purchases, the tax calculation can differ because the law treats the prices together. That can change both figures in the four-step method.
Example
WRA’s example concerns Wrexham. A company buys an office building there on 1 June 2021, pays £500,000 at once, and promises a further £300,000 if planning permission allows flats. The company expects the planning decision by 1 February 2022.
Using the rates that applied to that 2021 deal, tax on £800,000 is £27,750. Tax on £500,000 is £12,750. The difference is £15,000, so the four steps produce a maximum deferrable amount of £15,000.
After that, the guide says the company can request a deferral of £13,000. It does not explain why that requested sum is lower. A buyer can ask to defer less than the maximum, but the guide does not confirm that this explains its figure.
Why this can be difficult in practice
This is the part people get wrong: an unpaid payment does not qualify simply because it is due later. Later payment alone is insufficient. To qualify, it must be contingent or uncertain, and, among its possible due dates, at least one must fall beyond the six-month point rather than merely being an unpaid amount scheduled for later. Both conditions apply.
The contract wording often decides the issue. An unpaid fixed instalment may not qualify. Even if it has a set due date, it may not be contingent or uncertain. Tax rates in force when the deal took effect also shape the calculation.
- A payment can fail because it is fixed rather than uncertain.
- Rent follows separate rules and cannot enter this calculation.
- An annuity may also be excluded, even where its amount varies.
- The maximum deferrable amount is not necessarily the amount requested.
- The source’s unexplained £13,000 figure should not replace the £15,000 result of its stated calculation.
- A later event can trigger a further return if it creates extra tax.
Key takeaways
- Calculate tax once with the full price and once without the qualifying future payment.
- The difference is the most tax that can be deferred.
- Use the transaction-date rates and make the request with the first return.
Technical analysis
For advisers, and for anyone who wants to check the law behind this page. You do not need this section to understand the guidance above.
Legislation
- LTTA 2017 section 18 — what counts as the price for tax
- LTTA 2017 section 19 — when a payment depends on a future event
- LTTA 2017 section 20 — when the amount of a payment is uncertain
- LTTA 2017 section 21 — how certain periodic payments count as annuities
- LTTA 2017 section 27 — calculating tax for a single unlinked purchase
- LTTA 2017 section 28 — calculating tax for linked purchases
- LTTA 2017 section 47 — further returns when an uncertain price becomes known
- LTTA 2017 section 57 — when tax shown on a return must be paid
- LTTA 2017 section 58 — requests to defer tax on uncertain payments
- LTTA 2017 section 59 — the four-step deferrable amount calculation
- LTTA 2017 Schedule 6 para 9 — how lease payments count as rent
Official guidance
The pages below are the Welsh Revenue Authority’s guidance. Guidance is not law. It sets out how the Welsh Revenue Authority reads the legislation, and it is not binding on you, on a tribunal or on a court. Where guidance and the legislation differ, the legislation wins. the Welsh Revenue Authority can also change or withdraw guidance, and it may not cover your facts.
Where this is not settled
- The official example calculates a deferrable amount of £15,000, but its final sentence says that £13,000 can be requested. The source does not explain the £2,000 difference. A request may be for less than the maximum, but the example does not say that this is what happened.
Evidence you would need
This kind of case is decided on the facts of the individual property. These are the records that usually settle it, and the ones an adviser would ask you for.
- The contract and any side agreement showing every payment due.
- Evidence of what future event controls the payment or why its amount is not yet known.
- The effective date and the dates when each deferred payment may become due.
- The tax calculation using the rates and bands applicable on that date.
- The information required for the deferral request, including the proposed end date.
Explore this with an AI
Readers often want to test their own situation. Copy the prompt below into ChatGPT, Claude or Gemini. It hands the model the actual legislation for this page rather than letting it answer from memory, and tells it to be explicit about what is uncertain. What comes back is information, not advice – check it against the links above.
I am researching Land Transaction Tax (LTT), the tax on property in Wales. It replaced Stamp Duty Land Tax in Wales on 1 April 2018, and SDLT does not apply in Wales. MY QUESTION How to calculate Land Transaction Tax you can defer [Replace this with your own situation: what you are buying, the price, the dates, who the buyer is, and what you plan to do with the property.] THE LAW THIS TURNS ON - LTTA 2017 section 18 - what counts as the price for tax https://www.legislation.gov.uk/anaw/2017/1/section/18 - LTTA 2017 section 19 - when a payment depends on a future event https://www.legislation.gov.uk/anaw/2017/1/section/19 - LTTA 2017 section 20 - when the amount of a payment is uncertain https://www.legislation.gov.uk/anaw/2017/1/section/20 - LTTA 2017 section 21 - how certain periodic payments count as annuities https://www.legislation.gov.uk/anaw/2017/1/section/21 - LTTA 2017 section 27 - calculating tax for a single unlinked purchase https://www.legislation.gov.uk/anaw/2017/1/section/27 - LTTA 2017 section 28 - calculating tax for linked purchases https://www.legislation.gov.uk/anaw/2017/1/section/28 - LTTA 2017 section 47 - further returns when an uncertain price becomes known https://www.legislation.gov.uk/anaw/2017/1/section/47 - LTTA 2017 section 57 - when tax shown on a return must be paid https://www.legislation.gov.uk/anaw/2017/1/section/57 - LTTA 2017 section 58 - requests to defer tax on uncertain payments https://www.legislation.gov.uk/anaw/2017/1/section/58 - LTTA 2017 section 59 - the four-step deferrable amount calculation https://www.legislation.gov.uk/anaw/2017/1/section/59 - LTTA 2017 Schedule 6 para 9 - how lease payments count as rent https://www.legislation.gov.uk/anaw/2017/1/schedule/6/paragraph/9 Guidance page from the Welsh Revenue Authority on this topic (guidance, not law): https://www.gov.wales/land-transaction-tax-returns-and-payments-technical-guidance#5598 HOW I WANT YOU TO ANSWER 1. Work from the legislation above. Read it before answering. Guidance from the Welsh Revenue Authority is its view of the law, not the law, and does not bind a tribunal or a court. 2. Tell me what the rule actually requires, in plain English. 3. Tell me which facts decide the answer, and which facts would change it. 4. Tell me what evidence I would need to support the position. 5. Be explicit about anything unsettled or fact-sensitive. Do not guess. 6. Your training data has a cutoff and SDLT rates and reliefs change at fiscal events. Say so if you are not sure the law is current. POINTS ALREADY KNOWN TO BE UNCERTAIN ON THIS TOPIC - The official example calculates a deferrable amount of £15,000, but its final sentence says that £13,000 can be requested. The source does not explain the £2,000 difference. A request may be for less than the maximum, but the example does not say that this is what happened. Do not give me a conclusion you cannot support from the provisions above.
Legislation links show the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 as it stood on 2025-11-17. The law may have changed since, and the rules that apply are those in force on the date of your transaction. The official guidance this page is based on is here.
This page was last updated on 3 September 2026
Useful article? You may find it helpful to read the original guidance here: How to calculate Land Transaction Tax you can defer
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