Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Stamp Duty Land Tax Manual

HM Revenue & Customs
, see all updates

Calculation of stamp duty land tax: Lease premium: Relevant rental figure: Example 4

This example relates to the calculation of the relevant rental figure under FA03/SCH5/PARA9(2A) and FA03/SCH5/PARA9(3) for the purpose of calculating stamp duty land tax (SDLT) on the premium paid for a lease of non-residential property where the effective date is on or after 12 March 2008 (see SDLTM13012).

The amounts used for calculating the relevant rental figure may be different from those usedfor determining the net present value of the rent – refer to SDLTM13075. 

A non-residential lease for 999 years is granted on 1 June 2008 for a premium of £150,000 and a ground rent of £250 per year. The ground rent doubles every 25 years for the first 100 years.

The rent in this case is variable so, per FA03/SCH5/PARA9(3), the relevant rental figure is the highest ascertainable annual rent during the term of the lease:- 

The ground rent payable in years 1 - 25 is £250; 

The ground rent payable in years 26 - 50 is £500; 

The ground rent payable in years 51 - 75 is £1,000 and 

The ground rent payable in years 76 - 100 is £2,000.

The relevant rental figure is therefore £2,000.

As this is more than £1,000, the 0% non-residential threshold is not available for the purposes of calculating tax on the premium. The premium is taxable at 1% as it is below the £250,000 threshold.