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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: Example 1

The effective date of a lease is granted on (ie its last date of execution is on) 11 July 2009 for a term of 10 years is when the tenant takes entry on 28 May 2009 (no previous substantial performance) (within 3 months of the commencement) at a rent of £35,000 per annum, with a rent review to open market rent on the fifth anniversary of the date of entry (which is stated to be 28 May). The lease term for stamp duty land tax purposes commences on the effective date (SDLTM18725).

As the first rent review on 28 May 2014 falls within five years of the effective date, an estimate of the rent payable from 28 May 2014 would normally be required for the purposes of establishing the rents for years 6 to 10 and the net present value (NPV) calculation. However, as the rent review meets all the criteria at FA03/SCH17A/PARA7A, it is treated as falling after the end of the fifth year of the term, so is disregarded for the purposes of the NPV calculation.

The NPV is calculated using £35,000 as the rent payable for the entirety of the term, as it is the highest rent payable in the first five years.