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HMRC internal manual

Stamp Duty Land Tax Manual

Chargeable Consideration: Rent: Inclusive of services etc.

Service charges payable from tenant to landlord are not chargeable consideration for stamp duty land tax (SDLT) purposes and are excluded from the calculation of tax as long as payment of service charge has been either:

* provided for in the lease as a separate figure or
* expressed in the lease as part of an inclusive rent payment and apportioned on a just and reasonable basis.

The fact that a service charge is treated in the same way as rent in the lease as rent for some purposes does not make it rent for SDLT purposes.

Where apportionment of an inclusive figure is needed, this must be made on a just and reasonable basis for SDLT purposes and will not necessarily be the same as the apportionment (if any) set out in the lease documentation.

Where a single sum is payable in respect of rent or of rent and service charges and:

* there is no apportionment in the lease between rent and service charge and/ or
* the service charge is not separately provided for in the terms of the lease,

then the sum is to be treated entirely as rent for SDLT purposes.

Service charges are the most common item of non-chargeable consideration for a lease, but the above treatment applies equally to other non-chargeable consideration, under FA03/SCH17A/PARA6.

See FA03/SCH4/PARA4 re: just and reasonable apportionment.

See SDLTM18060 re: non-chargeable consideration.