Notification: Continuation of a lease: Example 2
A 10-year non-residential tenancy within the Landlord and Tenant Act 1954 is granted from and including 1 December 2005, with annual rent of £50,000 per year. The net present value (NPV) on which tax is paid for this lease is £415,830. The non-residential threshold for NPV as at 1 December 2005 was £150,000 and the tax rate 1%. Stamp duty land tax (SDLT) of £2,658 was paid when notification of the grant was made.
The tenant continues in occupation past 30 November 2015 whilst negotiating new terms withthe landlord, and the lease continues beyond the fixed term by operation of law. The lease is treated for SDLT purposes as having been extended for one year. Treatment of this extension is covered in example 1 – refer to SDLTM14070.
The lease continues past 30 November 2016, again by operation of law, as negotiations are still continuing. For SDLT purposes, the lease is again treated as being extended by one year, so is now for a term of 12 years from 1 December 2005. The new NPV is £483,166.
As more SDLT is again due, this notional extended lease must be notified within 30 days ofthe day after the expiry of the previous lease (that is on or before 31 December 2016) and the additional tax paid.
Irrespective of any interim changes in rates, thresholds or reliefs, additional tax due on this 12-year lease is calculated using the rates, thresholds and reliefs in place at 1 December 2005. The additional tax due is (£483,166 - £150,000 = £333,166 x 1% = £3,331less already paid of £3,000 = £331 extra due).