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HMRC internal manual

Stamp Duty Land Tax Manual

From
HM Revenue & Customs
Updated
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Chargeable Consideration: Tenant's obligations

When a new lease is granted, the following do not count as chargeable consideration, under FA03/SCH17A/PARA10:

* any undertaking by the tenant to repair, maintain or insure the premises;
* any undertaking by the tenant to pay any amount for services, repairs, maintenance or insurance or the landlord’s costs of management;
* any other obligation undertaken by the tenant that is not such as to affect the rent that a tenant would pay in the open market;
* any guarantee of the payment of rent or the performance of any other obligation of the tenant under the lease;
* any penal rent, or increased rent in the nature of a penal rent, payable in respect of the breach of any obligation of the tenant under the lease.

The following are also excluded from chargeable consideration under SI 2006/875:

* payment by a tenant of a landlord’s other reasonable costs on or incidental to the grant of a lease, or an obligation to pay such costs (including of an extension to the lease, as this is treated for SDLT purposes as the grant of a new lease) (SI 2006/875);
* an obligation on an agricultural tenant to renounce his or her entitlement to Single Farm Payment to the landlord on termination of the lease (SI 2006/875);

Payment by a tenant in discharge of any of the obligations noted above does not count as chargeable consideration.

The above payments are not chargeable consideration even if they are treated in the same way or “reserved” as rent under the terms of the lease (see para 11010). However, where a single sum is provided for in the lease, to cover for example both rent and service charge, the amount excluded from chargeable consideration must be calculated according to the just and reasonable apportionment rules in FA03/SCH4/PARA4(1)(b) - see SDLTM18015 for details.

On renunciation/surrender of a lease, payment to release a tenant from any of the above obligations is not chargeable consideration.