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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 (SDLT): Rent: Variable or uncertain rent: Five-year rent reviews: Example 1

A lease is granted on 11 July 2005 for a term of 10 years from 25 June 2005 (within 3 months of the commencement) at a rent of £35,000 per annum, with a rent review to open market rent on the fifth anniversary of the start date. The lease term for stamp duty land tax purposes commences on the date of grant (SDLTM14060).

As the first rent review on 25 June 2010 falls within five years of the date of grant, an estimate of the rent payable from 25 June 2010 would normally be required for the purposes of establishing the rents for years 6 to 10 and the net present value (NPV) calculation. However, as the rent review meets all the criteria at FA03/SCH17A/PARA7A, it is treated as falling after the end of the fifth year of the term, so is disregarded for the purposes of the NPV calculation.

The NPV is calculated using £35,000 as the rent payable for the entirety of the term, as it is the highest rent payable in the first five years.