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HMRC internal manual

Stamp Duty Land Tax Manual

Reliefs and Exemptions: Sale and leaseback arrangements: Example

Example 2

Company A owns a leasehold interest in a commercial property, to raise finance it decides to assign its lease to an unconnected company B in consideration of £1m and a leaseback at market rent of the ground floor only.

Section 57A applies as the transfer by A is in consideration of the leaseback by B of part of the property transferred so is an interest granted out of the interest acquired. The only other consideration for the transaction is the payment of money, there is no section 45 or 45A transaction and the companies are not connected for group relief purposes, so relief will be available on the leaseback.

The assignment of the original lease to B is chargeable in accordance with the rules for exchanges (see SDLTM04020 and SDLTM04020a) on the greater of the £1m given or its market value as encumbered by the new lease.