The purchase price may include a payment for items that are not part of the chargeable consideration. Those items must be valued at a rate reflecting their fair market value (see LBTT2016).
For example, if carpets are included in the sale of a home, the buyer and seller must agree a fair price which reflects their age and quality (note: fixtures and fittings do however form part of the chargeable consideration – see LBTT2002). This is then subtracted from the price paid to find the chargeable consideration.
The same rules apply to other moveable or intangible assets such as plant and machinery, stock in trade or goodwill, if they are included in the sale of a business. The portion of the purchase price allocated to such assets must be a just and reasonable allocation.
Other rules apply regarding items that are not included in the chargeable consideration:
- Partition or division of a chargeable interest – LBTT2010
- Cases where conditions for exemption are not fully met – LBTT2011
- Indemnity given by the buyer – LBTT2012
- Buyer bearing inheritance tax liability – LBTT2013
- Buyer bearing capital gains tax liability – LBTT2014
- Arrangements involving public or educational bodies – LBTT2015