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HMRC internal manual

Stamp Duty Land Tax Manual

Reliefs: Right to buy transactions, shared ownership leases etc: Market value election for leasehold property where additional shares may be purchased: detailed conditions FA03/SCH9/PARA4

This page applies to a market value election in respect of a shared ownership lease under which additional shares may be purchased (“staircasing”), but where the freehold reversion is not available.

In addition to meeting the general conditions at SDLTM27020, these leases must meet all of the following conditions.

  • The lease must provide that the lessee (or lessees), on payment of a sum, may require the terms of the lease to be altered so that the rent payable under the lease is reduced.
  • The lease must be granted partly in consideration of rent and partly in consideration of a premium calculated by reference to

    • the premium obtainable on the open market for the grant of a lease containing the same terms as the lease but with the substitution of the minimum rent for the rent payable under the lease, or
    • a sum calculated by reference to that premium
  • The lease must contain a statement of the minimum rent and of

    • the premium obtainable on the open market or
    • the sum calculated by reference to that premium

by reference to which the premium is calculated.

The lessee must elect that stamp duty land tax is to be charged in accordance with FA03/SCH9/PARA4, on the minimum rent and the open market premium, or the sum calculated by reference to that premium, stated in the lease.

The election is made in the land transaction return submitted in respect of the grant of the lease by showing the market value as the consideration, or an amendment to that return changing the consideration to the market value. If the election is made by amendment it must be made within 12 months of the filing date.

The election is irrevocable, that is, once made it cannot be changed, even by an amendment (or further amendment) to the return.