Working out your Stamp Duty

How do you know what the consideration is

The consideration is usually the amount of money, excluding any Value-Added Tax (VAT), you pay for the property. For a lease, it is usually the average annual rent and any premium, excluding any VAT, you pay.

However, the consideration may not always be money. For example:

  • you may take responsibility for repaying a debt that the seller or transferor of the property owes
  • or
  • you may have a property transferred to you to pay off a debt owed to you
  • or
  • you may take shares instead of a cash payment.

You need to take these into account in working out the consideration for Stamp Duty purposes.

You should also consider if the property transfer is a gift.

VAT-exclusive consideration

If you buy or lease a new property, the price may include VAT. To work out your Stamp Duty, you should first work out the VAT-exclusive consideration.

What if you do not know the consideration?

Sometimes you will not know the property’s final price when you execute (sign, seal or both) the instrument (written document). If this is the case, you file the return and pay Stamp Duty on the market value of the property.

However, you should note the following exceptions:

Exception 1

Business asset transfer agreements may provide for:

  • an initial payment
  • and
  • adjustments, which may result in a further payment or refund at a later agreed date.

In such cases, you may pay Stamp Duty either on the market value or you may:

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

If the final consideration is higher:

  • amend your return to the final consideration
  • and
  • pay the additional Stamp Duty due.

You will incur interest if you pay this additional duty late.

You should write to the National Stamp Duty Office to request removal of the interest.

In your request:

  • include the Document ID (which you will find on your Stamp Duty return)
  • and
  • clearly identify the reason for your request.

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

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
  • and
  • pay Stamp Duty on the initial payment.

The adjusted consideration may be higher or lower than the consideration you included in your initial return. You should follow the process outlined in Exception 1 above for dealing with this.

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.

You can read more about consideration in Part 5 of the Tax and Stamp Duty Manual.

Next: Stamp Duty exemptions and reliefs