Stamp Duty on Off-Plan Purchases: When Is It Due?

Buying a new-build property off-plan means committing to a purchase before the property exists in finished form. You typically exchange contracts and pay a 10% (sometimes more) deposit early in the construction cycle. Completion follows when the developer has finished building and obtained sign-off — often one to three years later. The gap between exchange and completion creates an unusual SDLT planning question: which date determines the tax rate?

The effective date is completion — usually

The general SDLT rule is that the "effective date" is the date the transaction is substantially performed, which in most off-plan purchases is the date of completion (when you pay the balance, take legal title, and receive the keys). The 14-day SDLT return and payment window runs from this date.

This means the SDLT rates and thresholds in force on your completion day apply — not those in force when you exchanged. If government policy changes between exchange and completion, you bear the consequences.

The substantial performance trap

HMRC reserves the right to deem the effective date earlier than completion if the transaction has been "substantially performed" before then. The two main triggers are: (1) the buyer has paid at least 90% of the purchase price (so the deposit alone almost never triggers it, but a large interim payment might); or (2) the buyer takes possession of the property (for example, a key release for snagging).

If substantial performance occurs before legal completion, SDLT is due 14 days from that date — at the rates then in force. Most off-plan buyers never trigger substantial performance; deposits are usually 10% and possession transfers cleanly at completion. But high-deposit transactions or unusual key-release arrangements should be reviewed carefully.

Developer incentives and chattels

Off-plan and new-build purchases often include developer incentives: carpets, flooring, curtains, white goods, even furniture packs in some prime developments. The value of any chattels (moveable items not fixed to the property) can be deducted from the purchase price for SDLT purposes — sometimes saving £1,000 or more in tax.

The TA10 or developer's equivalent fittings list should itemise what's included. Ask the developer for a clean schedule with a reasonable second-hand value for each chattel. Don't accept a single "included" line item — the chattels need values to be deductible. Our guide to what counts as a chattel and our piece on stamp duty on new builds cover this in detail.

Stage payments

Some off-plan contracts require stage payments (a portion paid at various construction milestones). These do not trigger SDLT individually — the whole price is treated as paid at completion for SDLT purposes (unless they cumulatively trigger substantial performance, which is unusual). Stage payments do, however, affect your cash flow and your eventual mortgage drawdown — speak to your lender early.

Practical planning

Budget on completion-date rates, not exchange-date rates. The Treasury can — and does — change SDLT rules between Budgets. If you exchange today, look at the next two scheduled fiscal events and ask whether rates could rise.

Build a buffer. A £400,000 off-plan FTB purchase that took two years to complete might have moved from zero SDLT to £5,000 SDLT in that period. Always model the higher-rate scenario into your cash plan.

Get a chattels schedule. Push the developer for an itemised, valued list of every chattel included. This is often the easiest several-thousand-pound saving available on a new-build purchase, and most buyers don't ask for it.