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HMRC internal manual

Stamp Duty Land Tax Manual

HM Revenue & Customs
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Calculation of stamp duty land tax: Rent: Variable or uncertain rent: Review of estimate

Where the net present value (NPV) calculation contains any estimated or contingent figure(s) of rent (see SDLTM18520), it must be reviewed:

* at the end of the fifth year of the term of the lease or,
* at the date when the rent payable in the first five years can be ascertained at an earlier date, for example on the agreement or determination of a rent review within the first five years, then at the date when the rent is ascertained. (FA03/SCH17A/PARA8).

On review, recalculate the total NPV using the lease duty calculator:

* in respect of the first five years of the term of the lease using the actual figures of rent payable where available rather than the estimated or contingent figures,
* for years after the first five use the highest rent within the first five years, recalculated according to [SDLTM18530](,

If the revised total NPV is greater than that previously returned, a revised return should be made (by way of a letter to Birmingham Stamp Office (address is available @ HMRC website within the contact us pages) within 30 days of the review date, and the additional tax paid. A form SDLT1 is not required unless this is the first time the transaction has been notified.

If the revised NPV is lower than that previously returned, a claim for repayment may be made, also by way of letter to Birmingham Stamp Office.

This means that if any rent remains uncertain or unascertained after the first five years, the legislation does not appear to require a further return to be made. HMRC, however, take the view that further returns should be made as and when the rent is ascertained (see SDLTM18555). This point is under discussion with HMRC.

Interest payable on the additional tax due is calculated from the effective date of the original transaction and interest on overpaid tax is calculated from the date it was originally paid.

The revised tax should be calculated as at the effective date of the original transaction, regardless of:

* changes to tax rates and thresholds since the original effective date
* changes to the term of the lease and
* changes to the VAT treatment (e.g. if the landlord has waived exemption - see [SDLTM18265](