Miscellaneous Provisions: Grant of a reversionary lease: Example
A reversionary lease is granted on 1 December 2015 which has a term from and including 1 December 2020 to 30 November 2030, at an annual rent of £100,000.
The grant of this reversionary lease is notifiable (and any tax payable) on or before 31 December 2015.
The net present value (NPV) of the rent over the term of the lease is £831,660. The first year’s NPV calculation is £100,000 discounted by 3.5%, not £100,000 discounted by 3.5% six times. This is because the NPV calculation only starts at the first year of the term of the lease, which in the case of a reversionary lease is the date the lease term commences (1 December 2010 here) and not the date of grant.