The term ‘premium’ is not used in stamp duty land
tax (SDLT) legislation, despite being a common term for
consideration for a lease. Instead the legislation refers to:
Consideration given by a tenant to a landlord for the grant of a
lease will be charged to SDLT as a premium unless it is by way of
rent (or otherwise exempt from charge).
Chargeable consideration for the grant of a lease which is in
respect of a period
before the lease is granted is not rent
for SDLT purposes, even if it is described as such, and may be
taxed as a premium.
Premium payments for a lease are charged to SDLT in the same
way as other chargeable consideration, at a fixed percentage rate
depending on the amount.
Where both a premium and rent is payable for the grant of a
lease, the tax due on the two elements of consideration will be
calculated separately and added together to determine the total
SDLT payable. In aggregating the consideration, the tax-free
threshold is available only once for the transaction.
For treatment of consideration in respect of pre-grant
periods, refer to
SDLTM17110.
For further details of how SDLT is calculated on premiums,
refer to
SDLTM13010 and FA03/S55.
Refer to
SDLTM13100 onwards for details of how
SDLT is charged on rents.
