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HMRC internal manual

Stamp Duty Land Tax Manual

Calculation of Stamp Duty Land Tax (SDLT): Rent: Variable or uncertain rent: Review of estimate

Where the net present value (NPV) calculation contains any estimated or contingent figure(s) of rent (refer to SDLTM13150), it must be reviewed:

  • at the end of the fifth year of the term of the lease or, if earlier,
  • at the date when the rent payable in the first five years can be ascertained, for example on the agreement or determination of a rent review within the first five years (FA03/SCH17A/PARA8).

On review, recalculate:

  • the NPV in respect of the first five years of the term of the lease using the actual figures of rent payable rather than the estimated or contingent figures,
  • any new highest rent for years after the first five, recalculated according to SDLTM13160,
  • the NPV for years of the lease after the first five, using any new highest rent and
  • the total new NPV for the whole term of the lease.

If the revised total NPV is greater than that previously returned, a revised return should be made (by way of a letter to the Stamp Taxes) within 30 days of the review date, and the additional tax paid. A form SDLT1 is not required unless this is the first time the transaction has been notified.

If the revised NPV is lower than that previously returned, a claim for repayment may be made, also by way of letter to the Stamp Office.

Interest payable on the additional tax due is calculated from 30 days after the effective date of the original transaction (FA03/S87(1) and S87(3)(c)) and interest on overpaid tax is calculated from the date it was originally paid.

The revised tax should be calculated as at the effective date of the original transaction, regardless of:

  • changes to tax rates and thresholds since the original effective date
  • changes to the term of the lease and
  • changes to the VAT treatment (e.g. if the landlord has waived exemption - refer to SDLTM12050)

Once the end of the fifth year of the term is reached the rent should be revisited and the highest rent for the first five years should be used to calculate any further SDLT due. There is no requirement to revisit after the five year period.

If the recalculation results in an overpayment of SDLT a claim should be made in accordance with FA03/Sch17A para 8(5).  There is no time limit for this claim.