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HMRC internal manual

Stamp Duty Land Tax Manual

HM Revenue & Customs
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Calculation of stamp duty land tax: Deposit & loan arrangements: Example 3

A residential lease is granted on 1 June 2008 for a term of 99 years for a premium of £115,000 and at an annual rent of £1,000. The tenant pays a rent deposit of £15,000 as security for the payment of a separately reserved service charge.

The rent deposit is more than twice the relevant maximum rent of £1,000 so is treated as a premium paid by the tenant for the grant of the lease. This notional premium £15,000 plus the premium £115,000 = total chargeable consideration £130,000 which exceeds the residential threshold of £125,000. The notional premium is therefore taxable at 1%.

The net present value of the rent is below the residential threshold and is therefore not taxable.

Total stamp duty land tax of £1,300 is, therefore, due.