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HMRC internal manual

Stamp Duty Land Tax Manual

Miscellaneous Provisions: Substantial performance of an agreement: Example 2


A non-residential agreement for lease is concluded on 1 July 2008 and is substantially performed on 1 August 2008. The term of the lease is 5 years from and including 1 September 2008 at a rent of £90,000 per annum. The lease is granted on 1 December 2008. A return is required for the notional lease, the term of which is 1 August 2008 to 31 August 2013. The net present value (NPV) of the lease is £412,572 on which tax is due.

The term of the notional lease is 5 years 31 days and the rent to be input into the NPV calculator for each of the first five years is £90,000. The highest rent is also £90,000 but is only payable for 31 days, so the rent for the final part year is just 31/365 x £90,000 = £7,643 which the calculator calculates automatically.

On the grant of the lease, 1 December 2008, the notional lease is deemed to have been surrendered. The lease runs from and including the date of grant, 1 December 2008, to 31 August 2013. As this period is common to the notional lease, overlap relief applies for the entire term. As the rent payable is identical, the rent payable under the lease is taken to be nil. No land transaction return is required.