Land and buildings ― buying and selling ― overage arrangements

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This guidance note provides:

•
an explanation of overage arrangements
•
guidance regarding the VAT treatment of overage payments
•
guidance regarding other VAT implications of overage payments

For an overview of the VAT treatment of buying and selling land and buildings, see the Land and buildings - buying and selling - overview guidance note.

For commentary on the VAT legislation that affects overage arrangements, see De Voil V4.110R.

What are overage arrangements?

Land or a building may be sold on terms that may result in the buyer being required to make additional payment(s) to the seller in the future. Overage is an arrangement whereby the seller is entitled to receive from the buyer one or more payments, in addition to the initial consideration, if one or more events occur in the future. For example, the buyer may be required to pay the seller an amount in addition to the initial consideration if planning permission is obtained, and a further amount if a development is completed. The

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