Costs, SDLT and tax

Stamp Duty Is Charged on the VAT Too — and You Cannot Reclaim It

PropertyVAT Team · Updated 20 October 2026 · 3 min read

Most buyers know they will have to fund the VAT and get it back later. Far fewer know that the VAT quietly increases a tax they will never get back.

The rule

For stamp duty purposes, the chargeable consideration includes any VAT payable on the transaction. So where the seller has opted to tax, SDLT is calculated on the purchase price plus the VAT.

What it costs

Take a £1,000,000 commercial purchase where the seller has opted to tax.

The VAT itself washes through. The stamp duty on that VAT does not. It is a real, unrecoverable addition to the cost of the deal, and it scales with the size of the purchase.

This is why the VAT question is not purely a cash-flow question. It changes what the asset actually costs you.

Why people miss it

Three reasons, and they compound:

• The VAT is framed as temporary. Once a buyer accepts they will get the VAT back, the whole VAT issue gets mentally filed as a timing problem. The SDLT consequence does not fit that filing.
• Headline SDLT calculators ask for the price. If you enter the VAT-exclusive figure, you get the wrong answer.
• It surfaces late. The stamp duty figure is usually finalised close to completion, by which point the VAT position is settled and nobody revisits the budget.

The TOGC angle

Because the extra stamp duty flows directly from VAT being in the consideration, removing the VAT removes the extra SDLT as well.

That is what makes a transfer of a going concern worth real attention on a let commercial property. A successful TOGC takes the transaction outside the scope of VAT entirely, which means:

• No VAT to fund at completion
• No reclaim to wait for
• No additional stamp duty arising from the VAT

The conditions are strict and fact-specific, and a TOGC that fails late leaves you needing 20% at short notice. But on a let investment property it is the first question worth asking, because the saving is permanent rather than a timing benefit.

Scotland and Wales

The principle holds across the UK, but the tax is different:

Rates and bands differ in each, so run the numbers against the right regime rather than assuming the English position applies.

What to do about it

1. Budget SDLT on the VAT-inclusive figure from the outset, not the headline price.
2. Establish the VAT position early, because it changes the total cost, not just the timing.
3. Ask whether a TOGC is available on any let property, and get advice on whether the conditions are genuinely met.
4. Model both outcomes where a TOGC is intended but not certain, so a late failure does not catch you without funding.

The VAT is a cash-flow problem you can finance. The stamp duty on it is a cost you can only avoid by getting the VAT position right before you exchange.

This guide is general information, not tax advice. SDLT and VAT interact in ways that depend on the specific transaction — take advice before exchange.