Stamp Duty Land Tax (SDLT) - in
relation to the grant of leases
This is calculated by multiplying the
length of the lease by the annual known rent (plus vat if applicable) and then
applying a 'temporal discount'. The result is called the Net Present
Value (NPV) and the Tenant has to pay Stamp Duty Land Tax at the rate of 1% on
the amount by which the NPV exceeds £150,000. This is payable within 30 days
of the 'effective date' - generally speaking this means the date of
completion. The best way of calculating the NPV is to use a tool provide by
the Inland Revenue Stamp Office - click here
Stamp Duty Calculator. .
The £150,000 'duty free' allowance
mentioned above relates only to the NPV calculated on the grant of leases. It
does not apply to any premium charged on the grant of a lease or the
premium paid for the assignment of a lease, transfer of a freehold or any
other transaction.
It is necessary to complete a return and
submit this to the Inland Revenue Stamp Office The main form is SDLT1 and sometimes a
supplementary form SDLT4 see Inland Revenue:
Stamp Duty Land Tax. You will see that from the same page you can get
guidance notes.
Sometimes it is possible to avoid
submitting SDLT1 by self certifying the transaction. You can self certify it
by using from SDLT60. Again this is available from the same page. Basically you
can self certify if the lease term is less than 7 years and there is no SDLT
to pay (ignoring any reliefs that may be available)
If you have any concerns about this
you should refer to the Inland Revenue web site
Inland Revenue: Stamp Taxes
or telephone their help line on 0845 603 0135
The above is a very brief summary of the
main SDLT requirements in relation to the grant of commercial leases. If you need more information you
should check with the Inland revenue Stamp Office. The assignment of leases is
dealt with differently
HM Land Registry
If the term of the lease granted exceeds
7 years then the lease needs to be registered at HM Land Registry. You do this
using form AP1 which can be downloaded for free from the Land Registry web site
Land Registry : Online Publications. There is a fee charged by HM Land
Registry which is based on the amount of the rent
