Revenue Note for Guidance

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Revenue Note for Guidance

Section 42 Charging of consideration consisting of periodical payments

Summary

This section sets out how stamp duty is to be calculated where the consideration for a conveyance on sale is to be paid periodically.

Details

(1) This section provides that where—

  • periodical payments are payable for a definite period not exceeding 20 years, and
  • the total payable can be ascertained,

duty is chargeable on the total payable.

Example 1

A sells non-residential property to B in consideration of B paying A €5,000 p.a. for 20 years. The chargeable consideration is €100,000 (€5,000 × 20). The rate of duty is 2%.

Example 2

A sells non-residential property to B in consideration of B paying A €5,000 p.a. for 15 years plus an up-front payment of €6,000. The chargeable consideration is €81,000 ((€5,000 × 15) + €6,000)). The rate of duty is 2%.

(2) Where periodical payments are payable for a definite period exceeding 20 years duty is chargeable on the total payable during the first 20 years after the date of the instrument.

Example

A sells non-residential property to B in consideration of B paying A €4,000 p.a. for 30 years. The chargeable consideration is €80,000 (€4,000 × 20). The rate of duty is 2%.

(3) However, any provision in the instrument effecting the conveyance which secures the payments is not liable to duty.

(3) A separate instrument made for securing the payments is not liable to duty.

Relevant Date: Finance Act 2014