Miscellaneous Provisions: Linked leases: Single scheme: Pre-implementation: Example
A lease is granted on 1 November 2003 (shop 1) and is linked to a lease of different premises (shop 2) that is granted on 1 June 2005. Both leases are non-residential.
The leases are of different premises and are not ‘successive’ linked leases but on the facts are found to be linked as a ‘single scheme’ under FA03/S108.
- Calculate the total tax that would be chargeable on shop 1 if the linked transactions were a single transaction:
- net present value (NPV) of shop 1 = say £80,000 (NPV1). (Although NPV is not a concept for leases granted under stamp duty, it must be taken into account in determining tax due on a linked lease which is, itself, subject to stamp duty land tax (SDLT). The calculator cannot calculate the NPV of a lease granted pre-SDLT, so this will have to be done manually.)
- calculate the NPV of shop 2, say £120,000 (NPV2).
- aggregate the NPVs to give total NPV (TNPV) = £200,000
- Ignore tax that would be chargeable on shop 1 as this was a stamp duty lease.
- Calculate the total tax that would be chargeable on shop 2 if the linked transactions were a single transaction:
- Calculate TNPV as above: £200,000
- Total tax that would be chargeable on shop 2: £200,000 less threshold applicable as at 1 June 2005:
£ 1 5 0 , 0 0 0
£50,000 @ 1% = £500
- Apportion the total tax in proportion to the individual NPVs of the leases, in this case 80: 120. So £200 is apportioned to shop 1 (but no tax implications under SDLT) and £300 tax is due in respect of shop 2. For notification purposes, effective date is 1 June 2005.