Calculation of stamp duty land tax: Variable or uncertain rent: NPV: Example 1
A ten year lease is granted on 1 April 2009. Annual rents are due per the table below:
The actual rent payable for years 1 to 5 will be taken into account for the purposes of the net present value (NPV) calculation.
The figure of rent to be used for years 6 to 10 is £70,000, being the highest rent payable in a consecutive period of 12 months in the first five years of the term of the lease.
The start date of this 12 month period (1 April 2013) is used to determine whether any rent increase after five years is abnormal (see SDLTM18620).
The fact that the rent actually payable for years 6 to 10 is known (and exceeds £70,000) is not relevant for the purposes of calculating the NPV of variable rents.