LTT when a seller agrees to build or improve land you buy
Land sales with building work
Where a seller transfers land and also promises building, repair or improvement work, LTT may depend on whether the arrangements are separate or one interlocked bargain.
- WRA normally looks at the land as it stood on transfer.
- One overall bargain needs a just and reasonable split of its price.
- Contract terms on default and enforcement can be decisive.
Scroll down for the full analysis.
Read the original guidance here:
LTT when a seller agrees to build or improve land you buy
If you buy land and the seller will also build, repair or improve it, the full deal may matter for Land Transaction Tax. This is Wales’s version of stamp duty. The key question is simple: are you buying land as it stands, or one complete deal for land plus finished work?
What this rule is about
Some property deals have two documents. One transfers a plot. Another says the seller will build a home, finish an extension, or repair a building.
You might think two contracts always mean two separate deals. They do not. WRA says it looks at the commercial reality, not only the labels on the paperwork.
That can affect the amount used to calculate LTT. It can therefore affect the tax due.
What the official source says
The legislation starts with what you give for what you buy. It also says that, where one bargain covers land and another matter, you must split the total on a just and reasonable basis.
WRA’s guidance says that, in most cases, buyers acquire land in the condition it was in on the day it transferred to them. That is the usual starting point.
That will often be the position where, by the transfer day, work had not begun at all or, having begun, remained unfinished. Timing matters.
- Land may transfer before the seller starts the agreed work.
- Land may transfer while the seller has only partly finished it.
- Where the sale of the land and the agreement for works form a single bargain, you must divide the whole amount on a fair basis. The split must be fair.
- The split must cover every part of that one bargain.
- Separate prices in separate documents do not prevent this result.
- If the two agreements cannot be completed on their own, WRA may regard the subject as land with the completed work.
- For example, default under one agreement may stop either party enforcing the other.
A specific statutory rule also applies when the buyer’s consideration includes work to construct, improve or repair the land or property concerned under the transaction. All conditions must be met.
Its value does not count only if all the stated conditions are met. Among other things, the work must be after the effective date and must not be a condition that the seller, or someone connected with the seller, carries it out.
What this means in practice
The difficult part is often not the building work. It is working out the true shape of the deal.
A plot sale followed by an independent building job may need a fair split. A tightly tied package can produce a very different result.
What actually decides it? Read the agreements together, then ask whether either one could really happen without the other.
- Keep the land sale and works agreements, including all amendments.
- Check whether each contract has its own completion and payment terms.
- Check whether either party can enforce one agreement if the other fails.
- Record what work had been done when the land transferred.
- Keep plans and specifications that show the promised work.
- Explain how you reached any split of the overall price.
How to analyse it
Start with the facts on the transfer date. Then test the documents against the commercial reality. Do not begin and end with the headings used in the contracts.
- What land or property transferred on that date?
- What work had started, and what remained to be done?
- Who promised to do the work?
- Was the work a condition of the land sale?
- Could the land contract complete if the works contract failed?
- Could the works contract be enforced if the land sale did not complete?
- Is the stated division of the price fair for the parts of the deal?
- Do the separate statutory rules about works given as payment apply?
This is the part people get wrong: calling a document a separate works contract does not by itself make it separate for LTT.
Example
Priya agrees to pay £500,000 for a plot and a house the seller will build. The contracts show £300,000 for the plot and £200,000 for the work. At transfer, the plot is empty.
If the agreements can operate separately, WRA’s guidance indicates that buyers ordinarily acquire the plot as it stood on the transfer date, rather than completed work. The date matters.
Even then, you must still apportion the overall sum on a just and reasonable basis between the land transaction and the agreement for works under the bargain. The allocation must be fair.
Now change one fact. The contracts say neither side can enforce the land sale if the building agreement fails.
On the approach in WRA’s guidance, that may show one interlocked bargain. The subject may then be the land with the house completed. The labels and the £300,000 figure would not settle the answer.
Why this can be difficult in practice
Building projects are often arranged through linked paperwork. A sale contract, building contract, reservation form and specification may each tell part of the story. The answer can turn on a default clause that nobody noticed.
WRA’s page gives an approach, not a full list of outcomes. The facts and contract terms matter.
- A split price may be fair, but it must match the real deal.
- One overall sales process can still be one bargain despite separate paperwork.
- Work being unfinished at transfer does not automatically answer every question.
- A link between contracts is not enough on its own; its legal effect matters.
- The special rule for works given as payment has its own conditions.
Key takeaways
- Look at the real deal, not just the number of contracts.
- Land is usually considered in its state when it transfers.
- Interlocked land and works agreements can change what is treated as bought.
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 — introduces the rules for amounts paid on land purchases
- LTTA 2017 Schedule 4 para 1 — defines amounts paid for the subject of a transaction
- LTTA 2017 Schedule 4 para 4 — requires a fair split for one bargain with parts
- LTTA 2017 Schedule 4 para 11 — sets when the value of building works is excluded
- LTTA 2017 section 69 — defines the subject matter of a land transaction
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.
- Welsh Revenue Authority, Chargeable consideration technical guidance, LTTA/2370 Purchase of land with associated works to be carried out
Where this is not settled
- Whether contracts are truly separate, or are one interlocked bargain, depends on their terms and how the deal works in practice.
- A clause making one agreement unenforceable after default under the other may point to an interlocked deal, but the source gives it as an example rather than a complete test.
- No currency-notice.md was available in the mounted skills, so the current currency of the bundled statutory text should be checked.
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 sale contract and any building or works contract
- Plans, specifications, quotations and payment schedules
- Terms dealing with completion, default, termination and enforcement
- Evidence showing whether work had started or remained unfinished at transfer
- A clear explanation of how any total price has been split
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 LTT when a seller agrees to build or improve land you buy [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 - introduces the rules for amounts paid on land purchases https://www.legislation.gov.uk/anaw/2017/1/section/18 - LTTA 2017 Schedule 4 para 1 - defines amounts paid for the subject of a transaction https://www.legislation.gov.uk/anaw/2017/1/schedule/4/paragraph/1 - LTTA 2017 Schedule 4 para 4 - requires a fair split for one bargain with parts https://www.legislation.gov.uk/anaw/2017/1/schedule/4/paragraph/4 - LTTA 2017 Schedule 4 para 11 - sets when the value of building works is excluded https://www.legislation.gov.uk/anaw/2017/1/schedule/4/paragraph/11 - LTTA 2017 section 69 - defines the subject matter of a land transaction https://www.legislation.gov.uk/anaw/2017/1/section/69 Guidance page from the Welsh Revenue Authority on this topic (guidance, not law): https://www.gov.wales/chargeable-consideration-technical-guidance#5141 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 - Whether contracts are truly separate, or are one interlocked bargain, depends on their terms and how the deal works in practice. - A clause making one agreement unenforceable after default under the other may point to an interlocked deal, but the source gives it as an example rather than a complete test. - No currency-notice.md was available in the mounted skills, so the current currency of the bundled statutory text should be checked. 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: LTT when a seller agrees to build or improve land you buy
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