Glossary · UK
What is Overage Payment?
A deferred payment from a land or property sale triggered if the land achieves planning permission or a higher value within an agreed period after the sale.
Full Definition
An overage payment (also called a clawback or uplift payment) is a contractual obligation for a buyer to pay additional consideration to the seller if specified events occur after the sale -- typically the grant of planning permission, commencement of development, or the sale of built dwellings at a profit. Overage provisions are common in agricultural and development land transactions. Tax treatment depends on the structure: if the seller retains no interest in the land and receives a contractual right to future payments, the initial sale is still a disposal for CGT purposes but the overage payments themselves may be further disposals under Section 280 TCGA (contingent consideration) or income under ITTOIA if treated as trading receipts. SDLT may be due on overage payments when they are received. Overage agreements typically run for 10-25 years and may be registered as a legal charge or restriction on the title to protect the seller.