SDLTM16015 - Reliefs and Exemptions: Overlap relief: Example 1

A lease is granted on 1 April 2004 for 25 years (the old lease)

• the date of expiry is 31 March 2029
• rent of £144,000 per annum is payable under this old lease
• the net present value (NPV) of the old lease is £2,373,337
• stamp duty land tax (SDLT) of £22,233 is payable on the rent.

The old lease is surrendered and a new lease is granted on 1 April 2018 for 150 years

• rent of £110,000 per annum is payable under this new lease
  • The overlap period is from 1 April 2018 until 31 March 2029, that is, 11 years
  • The rent payable under the new lease is £110,000
  • The rent payable under the old lease is £144,000. This is the amount included in the first NPV calculation
  • The new lease is not a lease with variable rent and so FA03/SCH17A/PARA7 is not in point. The NPV calculation should use rent of £0 for years 1 to 11 inclusive (as the old rent is more than the new rent but the figure to be included in the calculation cannot be less than £0) and rent of £110,000 for years 12 to 150 inclusive.
  • The calculator will not cope with this calculation and it should be performed manually.