Guidance on Land Transaction Tax and Chargeable Consideration in Wales

Chargeable Consideration for Land Transaction Tax in Wales

For Welsh Land Transaction Tax, chargeable consideration is the value the buyer gives for the property, not just the stated purchase price. It can include cash, VAT, debt taken over, non-cash assets, some services or works, and certain payments made to third parties for the seller. Some items are excluded, and where a deal includes both land and non-land assets, the price must be split on a just and reasonable basis.

• Chargeable consideration can include money paid directly or indirectly, VAT, seller’s debts assumed by the buyer, and assets or services with a clear monetary value.
• Payments made by the buyer to third parties at the seller’s direction may count, but the buyer’s own separate fees usually do not.
• Fixtures are normally treated as part of the land, while removable items such as free-standing furniture, stock and some goodwill may fall outside LTT and need apportionment.
• Non-cash consideration is usually valued at market value on the effective date, and special market value rules can apply to exchanges and transfers involving connected companies.
• There is no discount for instalments or delayed payments, and special rules apply to contingent, uncertain or unascertained amounts, annuities, works, services and employment-related transfers.
• Some amounts are specifically excluded, including certain indemnities, some tax liabilities, and particular statutory costs, so each transaction must be reviewed on its facts.

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Chargeable consideration for LTT: what counts, what does not, and how to value it

This page explains what counts as chargeable consideration for Land Transaction Tax in Wales. That matters because LTT is charged by reference to the consideration given for the land transaction. In straightforward cases that is just the purchase price. In less straightforward cases, it can include VAT, debt taken over by the buyer, non-cash assets, some services, and payments made to third parties at the seller’s direction. It can also require apportionment where one deal covers land and non-land items.

What this rule is about

The basic question is: what has the buyer given, in money or money’s worth, for the subject matter of the land transaction?

Under the Welsh rules, chargeable consideration is not limited to cash paid to the seller. It can include:

• cash paid directly or indirectly
• something else with a monetary value
• VAT charged on the transaction
• debt of the seller taken on or released by the buyer
• in some cases, services or works provided by the buyer
• market value in special cases, such as certain exchanges or transfers to connected companies

At the same time, not every payment linked to a property deal is chargeable consideration. Some payments are specifically left out. Some items sold with a property are not part of the land. Some mixed transactions require the total price to be split on a just and reasonable basis.

What the official source says

The Welsh Revenue Authority guidance says that, unless a specific rule says otherwise, chargeable consideration is any money or money’s worth given for the subject matter of the transaction. This includes consideration given directly or indirectly by the buyer or by connected persons.

The source then sets out a series of detailed rules.

Fixtures, fittings and other non-land items

Items annexed to the property are treated as part of the land, so their value is normally within LTT. Examples given include fitted kitchen units, sinks, sanitary ware, Agas, wall-mounted ovens, central heating systems, alarm systems, and external plants, shrubs or trees.

Items that would not normally be treated as fixtures are outside LTT and should be apportioned out on a just and reasonable basis. Examples include carpets, curtains, blinds, free-standing furniture, most white goods unless fully integrated, some removable fires, light fittings, and plants or trees in pots.

The source stresses that the list is not exhaustive and that the contractual allocation between buyer and seller may not be decisive.

Money, money’s worth and foreign currency

Cash consideration includes money paid to the seller and also money paid by the buyer to someone else if the seller directs that payment and the payment is a condition of the transaction. The guidance gives examples such as the seller’s estate agent’s fees, legal fees, tender fees, introductory fees, or auction commission, including VAT on those fees.

By contrast, fees that are the buyer’s own liability and not paid at the seller’s direction are unlikely to be chargeable consideration. The source gives examples such as a buyer’s finder’s fee or auction entry or registration fees.

Non-cash consideration is included if it has a monetary value capable of being realised. The guidance gives examples such as jewellery, art, cars, stocks and shares.

If consideration is expressed in foreign currency, or in a non-national currency such as Bitcoin, it is converted using the closing exchange rate on the effective date, unless the parties agreed a different rate, in which case that agreed rate should be used.

Valuation and market value

Where consideration is not money or debt, it is generally valued at market value at the effective date. The source says market value is determined using the same approach as under the Taxation of Chargeable Gains Act 1992, although some LTT provisions require VAT to be included in the amount brought into account.

VAT

VAT chargeable in respect of the transaction is included in chargeable consideration. If an option to tax is made only after the effective date, the VAT arising from that later option is not included. Future VAT changes are not treated as contingent events.

The guidance also deals with leases, VAT rate changes, and later HMRC VAT rulings. If VAT should have been included but was not, the LTT return must be amended, or if amendment is no longer possible the taxpayer should notify WRA. If VAT was wrongly included and this is later corrected, the taxpayer may amend the return or claim repayment if amendment is no longer available.

Postponed payments and instalments

Where consideration is agreed but paid later or by instalments, the full agreed amount counts. There is no discount for the fact that some payments are due in the future.

Just and reasonable apportionment

If one deal covers more than one land transaction, or covers land plus other matters, the total consideration must be split on a just and reasonable basis. This commonly arises where a property sale includes non-fixture contents, or where a business sale includes land, goodwill, plant, machinery and stock.

The source also notes that trees and fruit growing on them are part of the land, but harvested crops, felled trees and potted plants are not. Cross-border and cross-title transactions may also require apportionment.

Goodwill

For business sales, WRA says it follows the same principles as HMRC on goodwill. The question is not whether goodwill exists, but what it is worth on the facts. In trade-related properties such as pubs, hotels, petrol stations and post offices, goodwill is found by deducting the value of separately identifiable assets from the value of the business as a going concern.

Exchanges and partitions

Special rules apply where land transactions are entered into by way of exchange. In some cases the chargeable consideration is based on market value rather than the stated bargain. If there is a major interest in land, market value is central, with rent and VAT added where relevant.

The source also contains an anti-avoidance style rule: when establishing market value for exchanges, reductions caused by steps taken mainly to avoid tax are ignored.

By contrast, a partition of Welsh land between people already jointly entitled to it is not treated as an exchange. Giving up a share in one part is not treated as consideration for acquiring a share in another part. But this partition rule only applies to land in Wales.

Land sold with associated works

Where the seller sells land and also agrees to carry out construction, repair or improvement works, the source says the subject matter of the land transaction must be identified by reference to the commercial substance of the deal, following Prudential Assurance Co Ltd v IRC.

Usually, the subject matter is the land in its condition at the transfer date. If the sale contract and works contract are one bargain, the total price must be apportioned on a just and reasonable basis between the land as it stands at transfer and the future works.

But if the agreements are so interlocked that one cannot be independently completed, the subject matter may instead be the land together with the completed works, so the full amount may be chargeable consideration.

Works and services provided by the buyer

If the buyer provides works as consideration, those works are not chargeable consideration if all the statutory conditions are met. Broadly, the works must be carried out after the effective date, on land acquired in the transaction or other land held by the buyer or a connected person, and it must not be a condition of the transaction that the seller or a connected person carries out the works.

If those conditions are not met, the open market value of the works, including VAT, is chargeable consideration.

For services other than works, the open market value of the services, including VAT, is chargeable consideration.

Debt

If the buyer satisfies, releases or assumes debt owed by the seller, that debt counts as chargeable consideration. The source makes clear that assumption of debt includes changes in rights or liabilities, not only a direct covenant by the buyer. For example, it can include releasing the seller from liability or indemnifying the seller.

Where property subject to debt becomes jointly owned, only the relevant proportion of the debt is treated as assumed. For joint tenants, that is divided equally. For tenants in common, it follows their beneficial shares.

Employment-related transactions

Special rules apply if an employer transfers land to an employee or a connected person because of the employment. Depending on the facts, chargeable consideration may be the amount actually paid, an amount linked to the taxable benefit rules, or at least market value.

Exempt transactions where consideration is still given

Where a transaction would otherwise be exempt because it is, for example, an assent by a personal representative or a variation of testamentary dispositions, any money or money’s worth given by the buyer can still be chargeable consideration, subject to the specific exclusions stated in the source.

Items specifically excluded from chargeable consideration

The source lists several things that are not chargeable consideration:

• an indemnity given by the buyer for ongoing liabilities relating to the land, including lease covenants, and payments under that indemnity
• inheritance tax paid or assumed by the buyer in certain transfers of value or will/intestacy cases
• capital gains tax paid or assumed by the buyer on certain non-arm’s-length transfers, but only if there is no other chargeable consideration
• certain landlord’s costs on statutory lease extension, lease grant or enfranchisement claims
• certain compulsory purchase costs and disturbance compensation
• certain sale and leaseback style arrangements involving public or educational bodies, where the legislation disapplies the usual exchange treatment

Contingent, uncertain and unascertained consideration

The source distinguishes three ideas:

• contingent consideration: payable only if a future event happens, or ceases if a future event happens
• uncertain consideration: the amount cannot yet be accurately calculated because of uncertain future events
• unascertained consideration: the amount can be calculated, but has not yet been worked out

Contingent consideration is generally calculated on the assumption that the contingent amount will be payable. Uncertain consideration is dealt with by making a reasonable estimate at the effective date. Unascertained consideration cannot be deferred simply because the figure has not yet been worked out.

The source says tax can be deferred only in certain combinations of these features, and not merely because the amount is unascertained.

Annuities

If consideration takes the form of an annuity payable for life, in perpetuity, indefinitely, or for more than 12 years, the chargeable consideration is treated as a one-off amount equal to 12 years’ payments. If the payments vary, the 12 highest payments are used. Index-linked changes based on inflation measures such as RPI or CPI do not count as variation for this purpose.

The source also says tax relating to annuity consideration cannot be deferred.

Connected companies and market value

Where a company buys land from a connected person, or where some or all of the consideration consists of shares in a connected company, the chargeable consideration is generally not less than market value at the effective date, plus rent if the transaction is a lease. If the actual chargeable consideration is higher than that deemed market value amount, the higher actual amount is used instead.

This rule overrides the normal result that a no-consideration transfer would not be chargeable. But exemptions and reliefs can still apply if their conditions are met.

The source then lists specific exceptions where the connected-company market value rule does not apply, including some trustee cases and some company distributions where group relief conditions are satisfied.

What this means in practice

The practical effect is that the LTT calculation often starts with the headline price, but may not end there.

You may need to add amounts that are easy to miss, such as:

• seller’s costs paid by the buyer as part of the deal
• VAT on the transaction
• mortgage or other debt taken over
• the value of non-cash consideration
• the market value of consideration in exchange cases or connected-company cases

You may also need to remove amounts that do not relate to the land transaction, such as free-standing contents, goodwill, stock, or other non-land assets. But those amounts must be removed on a just and reasonable basis, not simply by adopting whatever split is most tax-efficient.

In business and development transactions, identifying the true subject matter of the deal is often the key step. Is the buyer acquiring land as it stands today, with a separate works contract? Or is the buyer really acquiring land together with completed works under one inseparable bargain? The answer can materially change the LTT position.

How to analyse it

A sensible way to analyse chargeable consideration is to work through these questions.

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

Start with the commercial substance, not just the labels in the documents. If there are side agreements for works, services, debt release, leaseback or exchange, ask whether they are separate in substance or part of one overall bargain.

2. What has the buyer given for that subject matter?

List everything of value given by the buyer or a connected person:

• cash
• third-party payments made at the seller’s direction
• assets transferred
• shares issued
• debt assumed or released
• services or works

3. Is any of that consideration non-cash or expressed in another currency?

If so, identify the correct valuation basis:

• market value at the effective date for non-monetary consideration
• effective-date exchange rate, or agreed rate, for foreign or non-national currency

4. Does the price include items that are not part of the land?

Check whether the deal includes contents, stock, goodwill, removable machinery, or other non-land assets. If it does, make a just and reasonable apportionment.

5. Are any special statutory rules engaged?

In particular, check for:

• VAT
• instalments or postponed payments
• exchanges
• partitions
• works and services
• debt assumption
• employment-related transfers
• contingent, uncertain or unascertained consideration
• annuities
• connected-company acquisitions

6. Is any amount specifically excluded?

Review whether any part of the arrangement falls within one of the statutory exclusions, such as indemnities for ongoing liabilities, certain tax liabilities, statutory enfranchisement costs, or the public body rules.

7. If apportionment is needed, is it genuinely just and reasonable?

The source is clear that the contract split is not automatically accepted. The facts determine the correct apportionment.

Example

A buyer agrees to pay £600,000 for a small guesthouse business in Wales. The deal includes the freehold property, fitted kitchen units, beds and other free-standing furniture, stock, and goodwill. The buyer also agrees, as part of the bargain, to pay the seller’s auction commission and legal fees. The property is subject to a loan and the buyer assumes part of that debt.

On these facts, the LTT analysis would not stop at the £600,000 headline figure. The buyer would need to identify:

• what part of the £600,000 is for the land and fixtures
• what part is for non-land items such as free-standing furniture, stock and goodwill
• whether the seller’s auction and legal fees paid by the buyer are part of chargeable consideration
• how much debt has been assumed by the buyer and therefore counts as chargeable consideration

The resulting LTT figure could therefore be higher or lower than the headline price, depending on the facts and the apportionment.

Why this can be difficult in practice

Several parts of this area are highly fact-sensitive.

Fixtures versus chattels

The guidance gives examples, but not a complete code. Whether an item is annexed to the land can depend on how it is attached and why. Borderline items can be contentious.

Just and reasonable apportionment

This is a legal standard, not a mechanical formula. A figure written into the contract may be challenged if it does not reflect the real facts.

Works and development arrangements

The distinction between land as transferred and land plus future works can be difficult. The source points to commercial substance and whether the agreements are truly interdependent. That often requires close reading of the documents.

Debt assumption

Debt can be assumed in ways that are less obvious than taking over a mortgage. Indemnities, releases and changes in liability can all matter.

Contingent, uncertain and unascertained amounts

These concepts are different, and the ability to defer tax depends on the category. Misclassifying the amount can produce the wrong filing position.

Market value rules

In exchanges and connected-company cases, the taxable amount may be market value rather than the stated deal price. That can come as a surprise where the parties think little or no value has changed hands.

Key takeaways

• For LTT, chargeable consideration means more than the cash price. It can include VAT, debt assumption, non-cash assets, and some third-party payments.
• If one deal covers land and non-land items, the consideration must be split on a just and reasonable basis based on the facts, not just the contract wording.
• Special rules can replace the normal price with market value, especially in exchanges and transfers to connected companies.

This page was last updated on 24 March 2026

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

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