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HMRC internal manual

Stamp Duty Land Tax Manual

From
HM Revenue & Customs
Updated
, see all updates

Calculation of stamp duty land tax: Variable or uncertain rent: NPV: Example 2

A ten year lease is granted on 1 April 2004 where the monthly rent changes every 10 months to give figures of rent as shown in the table below:

Months 1 - 10 £4,000 per month
   
Months 11 - 20 £4,250 per month
Months 21 - 30 £3,900 per month
Months 31 - 40 £4,250 per month
Months 41 - 50 £5,000 per month
Months 51 - 60 £3,900 per month
Months 61 - 70 £4,500 per month
Months 71 - 80 £4,750 per month
Months 81 - 90 £4,550 per month
Months 91 - 100 £4,250 per month
Months 101 - 110 £4,900 per month
Months 111 - 120 £4,700 per month

To determine the highest rent in a consecutive period of 12 months within the first five years of the term of the lease, consider the rent payable for months 1 - 60 in 12- month blocks in monthly increments:

Months Calculation Total
     
1-12    

2-13

3-14

etc

9-20

10-21

11-22

12-24

etc

30-41

31-42

32-43

etc

39-50

40-51

41-52

Etc 10 x £4,000 + 2 x £4,250

9 x £4,000 + 3 x £4,250

8 x £4,000 + 4 x £4,250

etc

2 x £4,000 + 10 x £4,250

1 x £4,000 + 10 x £4,250 + 1 x £3,900

10 x £4,250 + 2 x £3,900

9 x £4,250 + 3 x £3,900

etc

1 x £3,900 + 10 x 4,250 + 1 x £5,000

10 x £4,250 + 2 x £5000

9 x £4,250 + 3 x £5,000

etc

2 x £4,250 + 10 x £5,000

1 x £4,250 + 10 x £5,000 + 1 x £3,900

10 x £5,000 + 2 x £3,900

Etc £48,500

£48,750

£49,000

etc

£50,500

£50,400

£50,300

£49,950

etc

£51,400

£52,500

£53,250

etc

£58,500

£58,150

£57,800

etc

The period of 12 consecutive months with the highest rent is months 39 - 50 and the highest rent is £58,500. This figure of rent should be used for years 6 - 10 in the net present value calculation. The start date of this 12 month period (1 June 2006) is used to determine whether any rent increase after five years is abnormal (see SDLTM18620).