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HMRC internal manual

Stamp Duty Land Tax Manual

From
HM Revenue & Customs
Updated
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Calculation of Stamp Duty Land Tax (SDLT): Rent: Net present value

To calculate the net present value (NPV) of rents for SDLT purposes:-

 

  1. Find the amount of rent payable in respect of each of the first five years of the term of the lease (or for each year of the term if shorter than five years).
  2. If any of the rent payable in respect of this period cannot be determined at the date of grant (for example if it depends fully or to some extent on turnover, or on some contingency), then make a reasonable estimate of what you expect each year’s rent to be, in accordance with FA03/S51(1) and FA03/S51(2) (refer to SDLTM13135).
  3. Calculate the highest rent payable in any continuous twelve month period. This will usually, but not always, be the highest annual rent payable.
  4. This highest rent amount should be used as the rent payable for all years after the first five for the rest of the term of the lease, irrespective of what rent is actually payable for this period
  5. Calculate the NPV of the rent payable for each year of the lease term, using either the calculator provided on the Stamp Office website or the formula at FA03/SCH5/PARA3. The figures of NPV for each year are then aggregated to give a total NPV for the rent over the lease term. An example of a manual calculation is provided at SDLTM13080.