Miscellaneous Provisions: Grant of a reversionary lease: Example
A reversionary lease is granted on 1 December 2005 which has a term from and including 1 December 2010 to 30 November 2020, at an annual rent of £100,000.
The grant of this reversionary lease is notifiable (and any tax payable) on or before 31 December 2005.
The net present value (NPV) of the rent over the term of the lease is £831,660. The firstyear’s NPV calculation is £100,000 discounted by 3.5%, not £100,000discounted by 3.5% six times. This is because the NPV calculation only starts at the firstyear of the term of the lease, which in the case of a reversionary lease is the date thelease term commences (1 December 2010 here) and not the date of grant.