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HMRC internal manual

Stamp Duty Land Tax Manual

Calculation of stamp duty land tax: Lease premium: Relevant rental figure: Example 3

This page relates only to the calculation of the relevant rental figure for the purposes of calculating stamp duty land tax (SDLT) on premiums, under FA03/SCH5/PARA9 (2A) and (3). Where consideration for a lease is in the form of both premium and rental payments special provisions apply which mean that the nil rate band is not available in respect of the premium if the average annual rent (called the “relevant rental figure”) exceeds £1,000 per annum (see SDLTM18410). The rental figures used for determining net present value and determining whether the nil rate band is available on the premium may be different- see SDLTM18455.

Example 3

A non-residential lease for 175 years is granted on 1 January 2009 for a premium of £275,000 and a ground rent of £250 per year. The ground rent does not change.

The relevant rental figure is the annual rent of £250. As this is below £1,000, the 0% threshold would be available for the purposes of calculating SDLT on the premium element of the consideration. However the premium exceeds the £250,000 threshold so is taxable at 3%.