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HMRC internal manual

Stamp Duty Land Tax Manual

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HM Revenue & Customs
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Term of a lease: Minute of variation to extend the term of a lease

Leases in Scotland are frequently extended by the execution of a minute of extension. The extension of a Scottish lease does not give rise to an implied surrender and regrant.

The execution of a minute of variation of a Scottish lease to extend its term is, however, treated for SDLT purposes as the grant of a new lease, commencing on the date following the date on which the lease would have expired but for the extension.

Notification of the grant of this deemed new lease and payment of the SDLT due is made within 30 days of the date of execution of the minute of variation to effect the extension (even although the deemed new lease is not due to commence until some time in the future).

The threshold, rates of tax and exemptions to be taken into account are those prevailing at the effective date (ie the date of execution of the minute of variation) - in recognition of the fact that the deemed new lease has been granted, albeit that its term does not start until some time in the future.

In calculating the NPV of the deemed new lease the start date of the deemed new lease is used for the purposes of discounting rents to net present value (FA03/SCH5/PARA3).

The extension of a Scottish lease is thus treated in the same way as the grant of a reversionary lease in England.

A minute of variation extending the term of a lease is not treated as an implied surrender and regrant in Scots law.

NB Entering into missives for the extension of a lease (but not actually executing the minute of extension) is not treated as the grant of a new lease at that point. This is because the possession which would normally trigger substantial performance is referable to the old lease and not the new extension).