Contingent Consideration: s51 FA2003 Guide

What Is Contingent Consideration?

Contingent consideration arises where all or part of the purchase price for a property is conditional on a specified future event occurring or not occurring. The payment obligation exists, but it is dependent on something happening, such as planning permission being granted, a tenant vacating, a business achieving certain turnover targets, or a remediation certificate being issued.

Section 51 FA2003 governs contingent consideration. The core rule is that for the purpose of calculating SDLT at the effective date of the transaction, contingent consideration is assumed to be payable. It does not matter that the event may never occur; at the moment of filing the return, HMRC requires you to include the contingent element in full.

Treatment at the Return Date

The land transaction return (SDLT1) must be filed within 14 days of the effective date of the transaction, which is the date of completion, or the date of substantial performance where the contract is substantially performed before completion. Exchanging contracts is not itself the effective date. At this point, SDLT must be paid on the total assumed consideration, which includes:

• The fixed, certain base consideration
• The full contingent amount, assumed to be payable regardless of probability

HMRC's treatment is binary in terms of the assumption: you assume 100% of the contingent amount will be paid. There is no discounting for probability. A contingent payment of £100,000 that is only 10% likely to occur is still treated as £100,000 for SDLT at the effective date.

Deferring Payment: s90 FA2003

While s51 requires the full contingent amount to be included in the SDLT calculation at the effective date, s90 FA2003 provides a significant cash flow benefit. Where the contingent (or uncertain) consideration is payable more than 6 months after the effective date of the transaction, the buyer can apply to HMRC to defer payment of the SDLT attributable to that contingent element.

This means the buyer still declares the full assumed consideration on the SDLT1 return, but applies to defer the portion of SDLT that relates to the contingent element rather than paying it all upfront.

Key Requirements for s90 Deferral

• Timing of the contingent payment: The contingent consideration must be payable more than 6 months after the effective date of the transaction. If the contingency could trigger within 6 months, deferral is not available.
• Application deadline: The application to defer must be made before the normal filing deadline for the SDLT return (14 days after the effective date). A late application will not be accepted.
• HMRC discretion: HMRC can approve the deferral with conditions. These may include requirements to notify HMRC if circumstances change, or to pay the deferred amount within a specified period once the contingency triggers.
• Interest still accrues: Deferral does not eliminate the interest charge. Interest on the deferred SDLT amount runs from the effective date. If the contingency triggers years later, the accrued interest will be payable alongside the deferred SDLT.

Worked Example: Planning Permission Contingency

A buyer purchases a property for £400,000, with a further £100,000 payable if planning permission for residential development is granted within 5 years of completion.

What Happens Next

Refund if Contingency Never Triggers

Section 80 FA2003 is the adjustment mechanism. It applies where the contingency occurs, or where it becomes clear that it will not occur. Where less tax turns out to be payable, s80(4) gives the buyer two routes to recover the excess, and which one is open depends entirely on the calendar. Inside the amendment window, the buyer amends the original return under Sch 10 para 6 FA2003. Once that window has closed, the buyer makes a claim to HMRC for repayment of the amount overpaid under s80(4)(b).

The amendment window is 12 months after the filing date of the original land transaction return (Sch 10 para 6(3) FA2003), and that filing date is 14 days after the effective date. It runs from the original return, not from the date the contingency falls away. In the planning permission example, a refusal that becomes final inside that first year lets the buyer file an amended SDLT1 on HMRC's online portal, recalculating SDLT on the base consideration only and claiming the refund. A refusal that becomes final after 4 years, once all appeal rights are exhausted, arrives long after the amendment window has shut, so the claim has to be made under s80(4)(b) instead.

The amended return must show the correct SDLT on the reduced consideration, and the refund is typically processed within 30 days of HMRC receiving the amended return, though complex cases may take longer.

Outside the Amendment Window: the s80(4)(b) Claim

Where the amendment window has closed, s80(4)(b) FA2003 still allows the purchaser to make a claim to HMRC for repayment of the amount overpaid. HMRC's guidance is explicit about the mechanics: if the twelve-month window has expired, a claim under Schedule 11A FA2003 should be made (SDLTM50300). Schedule 11A is titled "stamp duty land tax: claims not included in returns". It is the claims machinery, covering the form of claim, the declaration, the records you must keep and HMRC's enquiry powers. It is not itself a relief, and it carries no time limit of its own.

The claim is made in the form HMRC determines, with a declaration that the particulars are correct, and Sch 11A para 2(4) bars a repayment claim unless you hold documentary evidence that the tax was paid. Expect to show that the contingency definitively did not occur, that the original return was filed on the assumption that it would, and what was actually paid. HMRC may ask for formal evidence of the failure of the contingency.

This route is often confused with overpayment relief, which is a different provision with a much harder edge. Overpayment relief sits in Sch 10 para 34 FA2003, and para 34B(1) provides that a claim "may not be made more than 4 years after the effective date of the transaction". The deadline is not the only restriction. Para 34A lists seven cases, A to G, in which HMRC is not liable to give effect to a claim. Case B applies where the claimant is or will be able to seek relief by taking other steps under the SDLT legislation. Case C applies where the claimant could have taken those steps within a period that has now expired and knew, or ought reasonably to have known, before the end of that period that the relief was available. A contingency refund sits squarely within what those two cases are aimed at, because s80 supplies the other steps. Treat overpayment relief as a separate regime, not as a way of rescuing a s80 claim you did not make in time. The point is not beyond argument, because the Upper Tribunal read the para 34A exclusions narrowly twice in 2026. In BTR Core Fund JPUT v HMRC [2026] UKUT 27 (TCC) it held that a rate error made after a relief had been validly claimed was not a mistake in the claim under Case A. In HMRC v Candy [2026] UKUT 282 (TCC) it held that para 34 is a standalone remedy of last resort that a mandatory statutory repayment route does not displace, and observed that Cases A and C would rarely apply in that situation. Neither decides the s80 position, where Case B is the live obstacle, so take advice rather than assuming the door is shut.

Contingent vs Uncertain Consideration

Both types are dealt with by section 51 FA2003, which tells you how to value the consideration at the effective date. Contingent consideration is assumed to be payable. Uncertain or unascertained consideration, such as an overage clause depending on future rental income, planning units or market values, is valued on a reasonable estimate. Section 80 FA2003 is the adjustment mechanism that applies to both, once the contingency resolves or the amount becomes ascertained.

In practice, many complex consideration arrangements have elements of both contingency and uncertainty. The correct characterisation of the consideration type affects the initial SDLT calculation methodology and the procedure for subsequent adjustments. Specialist advice should be sought in any case where the consideration structure is not straightforwardly fixed.

Interest Accrual

Whether the consideration was contingent or uncertain, interest on any underpaid SDLT runs from the effective date of the original transaction, not from the date the contingency triggers or the consideration is ascertained.

This is most relevant where the consideration was uncertain and the initial SDLT was calculated on a reasonable estimate and additional SDLT becomes due when the true amount is ascertained. HMRC will charge interest from the original effective date on the additional amount, even though the consideration was genuinely not known at that point. The interest is not a penalty but is statutory and cannot be appealed on the basis that the underpayment was not the taxpayer's fault.

Common Pitfalls

Frequently Asked Questions