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HMRC internal manual

Stamp Duty Land Tax Manual

Calculation of stamp duty: Rent: Variable or uncertain rent: Example 5

A lease for a term of seven years is granted on 1 April 2004, with an initial rent of£100,000 per annum which is increased by 4% per year.

Because the rent is variable, the calculation of net present value (NPV) of this lease isbased on the known rent increases for each of the first five years only, with NPV foryears 6 and 7 being based on the highest rent paid in any twelve - month period in thefirst five years (in this example months 49 - 60).

The figures used would be:

Year 1 £100,000
   
Year 2 £104,000
Year 3 £108,160
Year 4 £112,486
Year 5 £116,986
Year 6 £116,986
Year 7 £116,986

The calculation will not require review because the known rent increases are included inthe original NPV calculation and are not estimated or contingent.