Calculation of Stamp Duty Land Tax (SDLT): Rent: Variable or uncertain rent: Five-year rent reviews
Under FA03/SCH17A/PARA7A, a rent review is treated as falling after the end of the fifth year of the lease term, so is effectively disregarded for stamp duty land tax purposes, if:
- it is the first or only review
- review is to an amount which is unascertainable in advance (e.g. market rent)
- the review date is five years after a specified date (e.g. ‘start date’ of lease predating grant), and
- the specified date falls within three months before the beginning of the lease term.
The outcome of the first rent review during the term of a lease will therefore be ignored if that rent review is after the date 4 years and 9 months from the start of the lease term.
The legislation refers to a ‘specified date’ so this provision only applies where the five-year review is provided for in the terms of the lease. However in practice HM Revenue & Customs accepts that the provision applies to any reviews falling within the last three months of the fifth year of the lease.