Reliefs and exemptions: Overlap relief: Example 2
A lease is granted on 1 April 2004 for 25 years (the old lease)
* the date of expiry is 31 March 2029 * rent of £144,000 per annum is payable under this old lease * net present value (NPV) of the old lease is £2,373,337 * stamp duty land tax (SDLT) of £22,233 is payable on the rent.
The old lease is surrendered and a new lease granted 1 April 2008 for 150 years
* rent of £175,000 per annum is payable under this new lease 1. The overlap period is from 1 April 2008 until 31 March 2029, that is, 21years 2. The rent payable under the new lease is £175,000 3. The rent payable under the old lease is £144,000. This is the amount included in the first NPV calculation
The new lease is not a lease with variable rent and so FA03/SCH17A/PARA7 is not in point. The NPV calculation should use rent of £31,000 for years 1 to 21 inclusive (being new rent £175,000 less old rent £144,000) and rent of £175,000 for years 22 to 150 inclusive to give a total NPV of £2,854,789 and SDLT due of £27,047.
1. The calculator will not cope with this calculation and it should be performed manually.