Guide on Contingent Consideration for SDLT and LTT in Wales Transactions

Contingent, Uncertain or Unascertained Consideration for SDLT and LTT

If the price paid for land is not fully fixed when the transaction completes, the tax position may need to be reviewed later. This applies where part of the price depends on a future event, is not yet known, or cannot yet be calculated. Whether SDLT or LTT applies matters, because the rules and procedures differ between the two regimes.

• These rules cover consideration that is contingent, uncertain or unascertained, such as overage, earn-out payments, price adjustments or balancing sums payable later.
• If the future event happens or the amount later becomes known, extra SDLT or LTT may become due at that stage.
• For Welsh transactions still within SDLT, the relevant rules remain in the Finance Act 2003, including provisions on later adjustments and deferral of payment.
• For transactions within LTT, similar rules are found in the Welsh legislation, with separate provisions for adjusting tax and applying to defer payment.
• In practice, advisers should identify these clauses early, decide which tax regime applies, and monitor post-completion events so that any further return or payment is not missed.

Scroll down for the full analysis.

Contingent, uncertain or unascertained consideration: how later price changes affect SDLT and LTT

This page explains what happens when the price for a land transaction is not fixed at the outset. That matters because stamp taxes are normally calculated by reference to the consideration given for the land. If some of that consideration depends on future events, is not yet known, or cannot yet be worked out, the tax position may need to be revisited later.

What this rule is about

In some property transactions, the amount paid is not a simple fixed sum on completion. The contract may provide for extra amounts to become payable if something happens later, or the final amount may be uncertain when the transaction takes place.

The source material deals with three related ideas:

• contingent consideration, where payment depends on a future event;
• uncertain consideration, where the amount is not yet settled;
• unascertained consideration, where the amount cannot yet be calculated.

The key issue is whether further tax may become due later, once the contingency is resolved or the amount becomes known.

What the official source says

The official material distinguishes between transactions that remain within SDLT in Wales and transactions that are subject to LTT.

For transactions in Wales that are still subject to SDLT, the source says that the existing SDLT rules continue unchanged. In particular, it refers to:

• section 51 Finance Act 2003, which deals with contingent, uncertain or unascertained consideration;
• section 80 Finance Act 2003, which deals with adjustments when a contingency ceases or the consideration becomes ascertained;
• section 90 Finance Act 2003, which allows applications to defer payment.

The source expressly states that additional SDLT may become payable to HMRC on or after 1 April 2018 if a contingency ceases or the consideration later becomes ascertained.

For land transactions subject to LTT, the equivalent rules are in the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act. The source points to sections 18, 19, 20, 47 and 48 of that Act for the treatment of contingent, uncertain or unascertained consideration, and sections 58 to 63 for applications to defer payment to the Welsh Revenue Authority.

What this means in practice

The practical point is simple: if the purchase price is not fully fixed when the transaction is taxed, the tax analysis may not end on the effective date of the transaction.

If later events show that more consideration is payable, there may be more tax to pay. That can happen under SDLT for transactions that remain within that regime, and under LTT for transactions within the Welsh regime.

The source does not set out the detailed mechanics, but it clearly shows two practical consequences:

• you may need to revisit the tax position after completion if the future event happens or the amount becomes known;
• there may be a route to defer payment where the legislation allows, rather than paying immediately on an amount that is not yet settled.

This is particularly relevant where the contract includes overage, earn-out style payments, price adjustments, deferred balancing sums, or any clause under which the total consideration depends on future facts.

How to analyse it

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

• Which tax regime applies: SDLT or LTT? The source makes clear that this matters because the relevant statutory provisions differ depending on whether the transaction is still subject to SDLT or falls within LTT.
• Is any part of the consideration contingent, uncertain or unascertained? In other words, is part of the price dependent on a future event, not yet known, or not yet calculable?
• What event will resolve the uncertainty? For example, is there a trigger date, a planning outcome, a valuation exercise, or a contractual formula that will later fix the amount?
• When does the contingency cease, or when does the amount become ascertained? That later point may trigger a further tax consequence.
• Is an application to defer payment available and appropriate under the relevant legislation? The source confirms that both SDLT and LTT contain deferral provisions, though under different statutory sections.

For conveyancers and advisers, the important practical step is to identify these clauses early in the transaction documents. If the contract contains any mechanism for later payments, the tax return position may need to reflect that structure, and there may need to be a system for monitoring future events after completion.

Example

Illustration: a buyer acquires land for a fixed initial sum, plus an additional amount if planning permission is granted within three years. At completion, that extra amount is contingent because it depends on a future event. If planning permission is later granted and the extra payment becomes due, the source indicates that the tax position may need to be adjusted at that point. If the transaction is within SDLT, additional SDLT may become payable to HMRC when the contingency ceases. If the transaction is within LTT, the equivalent Welsh statutory provisions apply.

Why this can be difficult in practice

The difficulty is often not the broad rule, but identifying exactly what the contract is doing and when the amount truly becomes fixed.

Some clauses look like simple deferred payments but are actually contingent. Others use formulas or valuation machinery that mean the amount is not ascertainable at the outset. In those cases, the tax treatment depends on the legal effect of the contract, not just the labels used by the parties.

There can also be administrative difficulty. A transaction may complete long before the relevant contingency is resolved. If no one tracks the later event, a further filing or payment obligation may be missed.

The source also shows the importance of not assuming that the same statutory references apply across regimes. In Wales, some transactions remain within SDLT, while others fall within LTT. The legal route for adjustments and deferral depends on which regime governs the transaction.

Key takeaways

• If the price for land is contingent, uncertain or not yet ascertainable, the tax position may need to be revisited later.
• For Welsh transactions still subject to SDLT, the relevant rules remain in Finance Act 2003, including later adjustments and possible deferral.
• For transactions subject to LTT, the equivalent rules are in the Welsh legislation, with separate provisions for later adjustment and deferral.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guide on Contingent Consideration for SDLT and LTT in Wales Transactions

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