SDLTM13250 - Calculation of stamp duty land tax: Rent: Abnormal rent increases
Where a rent increase is regarded as ‘abnormal’ for stamp duty land tax (SDLT) purposes, the increase is treated as the grant of a new lease for the balance of the term of the original lease, for consideration equal to the rent increase. These provisions (atFA03/SCH17A/PARA14 and FA03/SCH17A/PARA15 as amended by FA06/SCH25) apply whether the increase is in accordance with the terms of the lease or by way of variation of it, but only:
- to increases in rent payable after the end of the fifth year of the term of a lease and
- where the lease was subject to SDLT at the date of grant or deemed grant.
To find whether the increase is abnormal for SDLT purposes:
- Find the start date, which will be either
-
- The beginning of the lease term, or
- If the rent is uncertain or variable, the beginning of the ‘highest rent’ period (refer to SDLTM13135), or
- If there has been a variation or variations in the lease within paragraph 13 (refer to SDLTM15010), the date of the (most recent) variation, or
- If paragraph 14 has previously applied, the date of the last increase to which it applied.
- Find Y: the number of whole years between the start date and the date on which the new rent is first payable
- Find R: the rent previously taxed, which will be either
-
- The rent payable under the lease before the increase, or
- If the rent is uncertain or variable, the ‘assumed rent’ payable after the fifth year (refer to SDLTM13150), or
- If there has been a variation or variations in the lease within paragraph 13 (refer to SDLTM15010), the rent payable as a result of the (most recent) variation, or
- If paragraph 14 has previously applied, the rent payable as a result of the (last) increase to which it applied.
-
- Overlap relief is disregarded for these purposes (refer to SDLTM16010).
- Overlap relief is disregarded for these purposes (refer to SDLTM16010).
- Find the excess rent: the difference between the new rent and the rent previously taxed. The new rent is the rent payable as a result of the increase, or the ‘assumed rent’ payable if it is uncertain or variable.
- The rent increase is regarded as abnormal for SDLT purposes if the excess rent is greater than R multiplied by Y divided by 5
An example follows at SDLTM13255.
For details of how additional tax is calculated on abnormal rent increases, refer to SDLTM13260 and SDLM13265.

