How is Stamp Duty Land Tax Calculated?

When you buy property or land in England or Northern Ireland, Stamp Duty Land Tax (SDLT) is calculated on what HMRC calls the "chargeable consideration" — essentially, the total value you're giving in exchange for the property. This isn't always as straightforward as the sale price, particularly if...

What is chargeable consideration?

In a simple cash purchase of a house, the chargeable consideration is just the price you pay. But SDLT can apply to more complex arrangements where you're giving something of value in exchange for property or land.

Chargeable consideration includes:

Money paid for the property
Non-monetary payment such as goods, works, or services
Taking on or being released from a debt
Any VAT charged on the transaction

For example, if you and a partner own a property together and separate, with one person buying out the other's share, the chargeable consideration includes both the cash payment for the equity and the value of the outstanding mortgage that the remaining owner takes on.

What's included in the property value

The chargeable consideration covers everything that forms part of the land or property itself. This includes:

Buildings and structures on the land (such as farm buildings or garages)
Fixtures and fittings — things like bathroom suites, kitchen units, and built-in wardrobes
Intangible assets, such as goodwill attached to a business property
The value of any promises made by the seller (for example, a commitment to carry out repairs before completion)

What you can exclude

Some items included in a sale price are not part of the property itself and can be deducted from the chargeable consideration — but only if they're valued fairly.

Items you can exclude include:

Carpets, curtains, and freestanding furniture
Moveable equipment or machinery (when buying business premises)

You and the seller must agree a reasonable market value for these items based on their age and condition. You cannot inflate the value of moveable items to artificially reduce the SDLT due. HMRC expects the allocation to be fair and defensible.

For example, if you're buying a shop for £350,000 and the sale includes £15,000 worth of moveable shelving and equipment, you would pay SDLT on £335,000 — but only if the £15,000 valuation reflects a genuine market value for those assets.

Payments made over time

SDLT is based on the total agreed price, regardless of when you actually pay it.

Staged or postponed payments

If you agree to pay part of the price now and the rest later, you still owe SDLT on the full amount from the start. There's no discount or deferral of the tax just because you're spreading the payments.

For example, if you buy business premises for £1 million — paying £700,000 on completion and £300,000 in a year's time — you calculate and pay SDLT on the full £1 million at the time of purchase.

Payments dependent on future events (contingent consideration)

Sometimes a deal includes an additional payment that only becomes due if something specific happens in future. This is called contingent consideration.

For instance, you might buy a plot of land for £400,000 and agree to pay another £200,000 if you get planning permission for development.

HMRC treats contingent payments as if they will happen. You calculate SDLT on the full £600,000 from the outset. However, you can apply to defer actually paying the SDLT on the contingent £200,000 until the condition is met.

If the contingent payment later becomes due, SDLT is recalculated:

1. Apply the correct SDLT rate to the total consideration (£600,000 in this example)

2. Deduct the SDLT you've already paid on the initial £400,000

3. Pay the difference

Payments based on uncertain amounts (unascertained consideration)

If part of the purchase price depends on an unknown variable — such as future business turnover — you must make a "just and reasonable estimate" of what that amount will be, then calculate SDLT on that basis.

You can apply to defer payment of the uncertain portion. When the actual amount becomes known, you adjust the SDLT accordingly.

How SDLT bands apply

Once you've worked out the total chargeable consideration, you apply the relevant SDLT rates. These rates work in bands (similar to income tax), with different percentages charged on different portions of the price.

The rates differ depending on whether you're buying:

Residential property
Non-residential or mixed-use property

Additional rates may apply if you're buying a second home or you're not a UK resident. The thresholds and rates have changed several times since SDLT was introduced in December 2003.

For current 2025/26 rates and thresholds, you need to check which category your transaction falls into and whether any additional charges apply to your circumstances.

Who doesn't pay SDLT

SDLT does not apply if you receive property as a genuine gift with no chargeable consideration — meaning you're not paying anything or taking on any debt in exchange.

Also note that SDLT does not apply at all in Scotland (where Land and Buildings Transaction Tax has applied since 1 April 2015) or Wales (where Land Transaction Tax has applied since 1 April 2018).

Sources

What to include in a Stamp Duty Land Tax calculation

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.