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HMRC internal manual

Stamp Duty Land Tax Manual

Notification: Continuation of a lease

Where a lease continues past its original term as outlined in SDLTM14060or SDLTM14070, this must be notified in the following circumstances:

  1. The lease comes within the charge to stamp duty land tax (SDLT), once extended, as the net present value (NPV) of rents over the extended term exceeds the relevant threshold. This applies only to leases which, when granted, were for a term of less than seven years and were not chargeable to SDLT as consideration was below the tax threshold set out at FA03/S55. If, on continuation, the NPV of rents calculated over the extended term increases so that total consideration then exceeds the threshold, SDLT will become payable. Notification should be made on form SDLT1 and (where appropriate) supplementary forms in the normal way.
  2. The lease was notifiable on grant and the SDLT payable on the extended lease is greater than that previously notified. This applies where NPV over the extended term increases as at 1. above, but in cases where the original lease was notifiable (because the original term was seven years or more, or was less than seven years but the original consideration exceeded the threshold- refer to SDLTM12010). Under FA03/SCH17A/PARA3(5) andFA03/S77 (2)(a), it is the term of the lease when granted that is relevant.

Note that such a lease is not notifiable on extension merely because its term has‘grown’ to seven years or more.

Where a further notification is required, notification must be made within 30 days of the day following the expiry date of the previous lease (whether actual or notional).Notification should be by way of letter to The Compliance Team, Birmingham Stamp Office, giving details of the original and extended lease terms.

Irrespective of whether the original lease was for a fixed or indefinite term, the extended lease is treated as having been granted at the time of grant (or deemed grant) of the original lease and NPV calculations should be made on the basis that the extended lease was granted at this time. Any changes in thresholds, rates or reliefs since the date of grant (or deemed grant) have no effect on the tax due. If VAT was not chargeable on the rent at the date of grant (or deemed grant), the fact that VAT has since become payable isignored.

However, because the extension only takes effect after the expiry of the previous lease,notification and payment need only be made within 30 days of the date of deemed extension of the lease.