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HMRC internal manual

Stamp Duty Land Tax Manual

Chargeable Consideration: ‘Premium’ payments for lease

The term ‘premium’ is not used in stamp duty land tax (SDLT) legislation,despite being a common term for consideration for a lease. Instead the legislation refers to:

  • chargeable consideration which ‘consists of or includes rent’ (defined at SDLTM11010) and
  • ‘consideration other than rent’, i.e. a premium.

Consideration given by a tenant to a landlord for the grant of a lease will be charged to SDLT as a premium unless it is by way of rent (or otherwise exempt from charge).

Chargeable consideration for the grant of a lease which is in respect of a period before the lease is granted is not rent for SDLT purposes, even ifit is described as such, and may be taxed as a premium.

Premium payments for a lease are charged to SDLT in the same way as other chargeable consideration, at a fixed percentage rate depending on the amount.

Where both a premium and rent is payable for the grant of a lease, the tax due on the two elements of consideration will be calculated separately and added together to determine the total SDLT payable. In aggregating the consideration, the tax-free threshold is available only once for the transaction.

For treatment of consideration in respect of pre-grant periods, refer to SDLTM17110.

For further details of how SDLT is calculated on premiums, refer to SDLTM13010 and FA03/S55.

Refer to SDLTM13100 onwards for details of how SDLT is charged on rents.