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HMRC internal manual

Stamp Duty Land Tax Manual

Calculation of stamp duty land tax: Rent: Variable or uncertain rent: Five-year rent reviews

Under FA03/SCH17A/PARA7A, a rent review is treated as falling after the end of the fifth year of the lease term, so is effectively disregarded for stamp duty land tax purposes, if:

* it is the first or only review
* the review is to an amount which is unascertainable in advance (e.g. market rent)
* the review date is five years after a specified date (e.g. the date’ of entry of the lease), and
* the specified date falls within three months before the beginning of the lease term.

The outcome of the first rent review during the term of a lease will therefore be ignored if that rent review is after the date 4 years and 9 months from the start of the lease term.

The legislation refers to a ‘specified date’ so this provision only applies where the five-year review is provided for in the terms of the lease. However in practice HM Revenue & Customs accepts that the provision applies to any reviews falling within the last three months of the fifth year of the lease.

Thus the familiar practice of backdating dates of entry to the nearest preceding quarter date in order to achieve uniformity of rent review dates in, for example, shopping centre leases, does not trigger an estimated rent within the first five years.