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HMRC internal manual

Stamp Duty Land Tax Manual

Miscellaneous provisions: Linked leases: Single scheme: Calculation

Where leases are linked for stamp duty land tax (SDLT) purposes but the special provisions for successive linked leases do not apply for example a number of leases of different properties between the same or connected parties (see SDLTM19635 for guidance), then the rules for calculating SDLT are modified by Para 2 (5) and (6) of Schedule 5 FA2003 as follows:-

1. Calculate the total tax that would be chargeable on the first lease if the linked transactions were a single transaction:

1. Calculate net present value (NPV) of first lease (NPV1)
2. Aggregate NPV1 with NPV of second lease (NPV2) to give total net present values (TNPV) of rent payable over the terms of both leases. This is the relevant rental value for the purposes of Schedule 5 FA2003.
3. To arrive at the total tax chargeable on the first lease, apply TNPV to the threshold relevant at the date of grant of the first lease. Whether this is the residential or non-residential threshold will depend on the status of the total relevant land (all the land which is the subject of either lease).

1. Calculate the element of this total amount of tax which relates to the first lease by applying the calculation:
  NPV1/TNPV to the figure of tax at 1c)
     
1. Calculate the total tax that would be chargeable on the second lease if the linked transactions were a single transaction:

1. Calculate NPV of second lease (NPV2)
2. Aggregate NPV1 with NPV2 to give total TNPV of rent payable over the terms of both leases. This is the relevant rental value for the purposes of Schedule 5 FA2003.
3. To arrive at the total tax chargeable on the second lease, apply TNPV to the threshold relevant at the date of grant of the second lease. Whether this is the residential or non-residential threshold will depend on the status of the total relevant land (all the land which is the subject of either lease).

1. Calculate the element of this total amount of tax which relates to the second lease by applying the calculation:
  NPV2/TNPV to the figure of tax at 3c)
     

The chargeable consideration for each of the separate leases is aggregated to arrive at a figure of total tax which would have been payable had there been a single lease. However two separate tax calculations are needed to apply the SDLT rates and thresholds appropriate to each lease. The amount of tax in each case is then apportioned to arrive at a charge for each respective lease.

Note that the leases are linked, and the NPVs of rents aggregated, for the purposes of applying the relevant thresholds and rates fairly and proportionately, in accordance with FA03/SCH5/PARA2. These linked leases are not successive and the provisions of FA03/SCH17A/PARA5 do not apply.