Consideration

What if you do not know the consideration?

You may not know the final price on the date of execution (signing, sealing or both) of the instrument (written document). In this case, you pay Stamp Duty on the market value of the property.

There are four exceptions to this rule.

Exception 1

When you buy a business, the agreement to transfer the business to you (usually called a business asset transfer agreement) may provide for:

  • an initial payment
  • and
  • an adjustment when the final net value is known.

The adjustment may result in a further payment or refund at a later agreed date.

Stamp Duty may be paid on the market value. If you do not pay Stamp Duty on the market value, you can alternatively:

  • indicate on the Stamp Duty return that you do not have the final consideration
  • file the return
  • pay Stamp Duty on the initial payment.

If the final consideration is higher you should amend your return to the final consideration and pay the additional Stamp Duty due. 

You will be charged interest if you are late paying the extra duty. If you want the interest removed, you should write to the National Stamp Duty Office. You should include your Document ID and reasons why the interest should be removed in your request.

If the final consideration is lower, you may claim a refund of the Stamp Duty overpaid. You should amend your Stamp Duty return before claiming the refund.

NOTE

Exception 1 does not apply to consideration that is linked to the performance of the business in the years following the acquisition. Such consideration might be expressed in terms of a formula related to after-tax profits and may be capped at a specified amount.

Exception 2

If you buy shares and you agree to pay:

  • an initial payment
  • and
  • an adjusted payment when completion accounts are ready

you should:

  • indicate on the return that you do not have the final consideration
  • file the return
  • pay Stamp Duty on the initial payment.

Exception 3

In the case of a lease, if at the date you execute the instrument, you know the:

  • rent but not the premium
    • you pay Stamp Duty on the rent and the market premium
  • premium but not the rent
    • you pay Stamp Duty on the premium and the market rent.

You pay Stamp Duty on the market premium, if you do not know either the rent or the premium.

Exception 4

You pay Stamp Duty on ten times the market value of a site if:

  • you lease or buy the site with a connected building agreement to build residential property on it
  • and
  • you do not know the full consideration.