LTT: buyer indemnities for the seller’s land obligations
Buyer indemnities and LTT
A buyer’s promise to cover a seller’s qualifying land-related liability can be left out of the LTT calculation.
- The liability must be to a third party.
- It must arise from the seller’s breach of a land-related obligation.
- The agreement and payments under it are excluded.
Scroll down for the full analysis.
Read the original guidance here:
LTT and a buyer’s promise to cover the seller’s land obligations
A promise to cover the seller’s loss may not increase Land Transaction Tax (LTT), Wales’s version of stamp duty. This can matter when a property carries an old lease promise or another land-related obligation for which the seller could still face a claim. It often does.
What this rule is about
A buyer may agree to protect the seller if someone else makes a claim over the land and that claim concerns an obligation connected with the land. This is called an indemnity. When working out LTT, you will usually count the amount you give for a property.
Paragraph 14 creates a limited exception. As a result, a qualifying indemnity is not treated as part of the price.
What the official source says
Welsh Revenue Authority guidance says that an indemnity for ongoing land liabilities, including lease covenants, is not chargeable consideration when the statutory conditions are met. More detailed conditions appear in the Act.
- The buyer must agree to indemnify the seller.
- The seller’s liability must be to a third party.
- That liability must arise from the seller breaking a land-related obligation.
- The promise itself does not count as payment for the property.
- Nor does a payment made under that promise, whenever it is made.
What this means in practice
Where the conditions are met, do not add the indemnity amount to the figure used for LTT. Its label alone does not decide the issue.
- Read what the clause actually requires you to cover.
- Check who could claim against the seller.
- Check whether the claim stems from the seller’s breach.
- Keep the clause and records of any later payment.
How to analyse it
Start with the obligation, not the word “indemnity”. Ask instead why the seller might have to pay.
- Identify the seller’s obligation relating to the land.
- Identify the third party owed that obligation.
- Find the alleged breach by the seller.
- Match the indemnity clause to that possible liability.
- Separate it from any other amount paid for the property.
Example
Laura buys an office building for £400,000. As part of the purchase, she promises to repay the seller for losses resulting from the seller’s earlier breach of a repair promise owed to a tenant. She later pays £8,000. On those facts, the £8,000 is not added to the £400,000 solely because of the indemnity.
Why this can be difficult in practice
People often assume that any promise to meet an old cost is excluded, even where the seller’s obligation, the claimant, and the reason for liability remain unclear. That assumption can mislead. The statutory rule needs a third-party liability caused by the seller’s breach.
- An ongoing cost is not automatically a qualifying indemnity.
- A lease clause may need careful reading.
- The guidance is not law; the Act takes priority.
Key takeaways
- A qualifying buyer indemnity does not increase LTT.
- The seller’s breach and a third-party liability are central.
- Contract wording and supporting facts matter.
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 Schedule 4 para 1 — what counts as payment for a land transaction
- LTTA 2017 Schedule 4 para 14 — when a buyer’s indemnity is excluded
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/2430a
Where this is not settled
- Whether a particular promise is an indemnity for the seller’s breach, rather than another payment for the property, depends on the contract and the facts.
- The guidance’s reference to ongoing liabilities and lease covenants should be read within the narrower statutory conditions.
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 indemnity clause.
- Details of the obligation, the alleged breach and the third party involved.
- Records of any payment made under the indemnity.
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: buyer indemnities for the seller’s land obligations [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 Schedule 4 para 1 - what counts as payment for a land transaction https://www.legislation.gov.uk/anaw/2017/1/schedule/4/paragraph/1 - LTTA 2017 Schedule 4 para 14 - when a buyer's indemnity is excluded https://www.legislation.gov.uk/anaw/2017/1/schedule/4/paragraph/14 Guidance page from the Welsh Revenue Authority on this topic (guidance, not law): https://www.gov.wales/chargeable-consideration-technical-guidance#5161 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 a particular promise is an indemnity for the seller's breach, rather than another payment for the property, depends on the contract and the facts. - The guidance's reference to ongoing liabilities and lease covenants should be read within the narrower statutory conditions. 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: buyer indemnities for the seller’s land obligations
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