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HMRC internal manual

Stamp Duty Land Tax Manual

Calculation of stamp duty land tax: Rent: Variable or uncertain rent: Contingent, uncertain or unascertainable

Special rules apply to calculate the net present value (NPV) of all variable rents (see SDLTM18505). Where the rent is uncertain, unascertainable or contingent, FA03/S51(1) and FA03/S51(2) set out the assumptions or estimates to be used in determining rent for the purposes of the calculation.

In many cases the variation provided for in the lease cannot be quantified at the date of grant of the lease, for example where rents are to be reviewed in line with market rents or business results as at a future date, or index-linked. Such rents are uncertain or unascertainable. For the purposes of calculating the NPV for the first five years, a reasonable estimate should be made of the amount payable (FA03/S51(2)) . This need not necessarily be a professional valuation, but evidence of the basis of the estimate must be kept in case of query. See SDLTM18570 - SDLTM18615 for examples.

Leases may also provide for the level of rent payable to be wholly or partly dependent upon an unknown outcome, such as the granting of planning permission. Such rents are contingent. Where the rent is contingent, the NPV for the first five years is calculated on the basis that any contingent amount will be payable (or will not cease to be payable) (FA03/S51(1)).

No other parts of FA03/S51 apply to the rental element of leases. Therefore if the contingency does not occur, it is not possible to amend the calculation under FA03/S80(4) and it is not possible to apply for deferment of payment of stamp duty land tax under FA03/S90 because some of the rent is contingent or unascertained.

However, there is provision at FA03/SCH17A/PARA8 to adjust these figures in certain circumstances (see SDLTM18525).