SDLTM21560 - Minimum consideration rule

Paragraphs 12 to 14 of FA03/SCH2A contain the minimum consideration rule. The rule only applies where the ultimate purchaser is either connected with, or not acting at arm’s length from, the transferor (or any other preceding transferor where there are successive pre-completion transactions). It can be ignored for all other (most) transactions.

Where the rule applies, it can increase the consideration for the ultimate purchaser’s acquisition. If either of two ‘minimum amounts’ is higher than the amount of consideration given by the normal rules, then the consideration is increased to the higher minimum amount.

The first minimum amount is generally the amount due under original contract. The second minimum amount is given by a formula which includes the net amount given by each party (subject to certain exceptions) to the transactions.