SDLT on deferred consideration

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    SDLT on deferred consideration

    A property is being sold for £175K of which £45K is being paid on completion (to clear the existing mortgage) with the balance being payable "on demand".

    According to the solicitor, who says she has spoken to the Inland Revenue, this will be not be subject to SDLT as it is based on the physical consideration of £45K and therefore under the threshold.

    My understanding is that SDLT is payable on the purchase price (or market value) which would give rise to £1750.

    The sale is being structured in this way as is between father to daughter and they want to avoid IHT consequences - the £175K is a fair market value and supported by Surveyors valuation.

    What is the correct treatment of SDLT in this case.

    Full purchase price carries SDLT. The consideration is £175 000 (not £45 000).
    The fact that only part of the price is paid-over on completion makes no difference. It's just like a sale-and-mortgage back (in which P might leave all price outstanding on mortgage back to V; still, the whole price is subject to SDLT).
    See leaflet SDLT6- esp. question 10 (and, in question 12, "cash code 30" and "contingent consideration code 39").
    JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
    1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
    2. Telephone advice: see
    3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
    4. *- Contact info: click on my name (blue-highlight link).


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