Where indefinite term leases continue after their notional
initial term of one year (refer to
SDLTM14050), their treatment for stamp
duty land tax (SDLT) purposes is similar to that of continuing
fixed term leases: under FA03/SCH17A/PARA4, they are treated as a
lease for a term of two years from the date of grant (or deemed
grant), being one year longer than the initial notional term.
Where SDLT was chargeable on the initial 12-month lease, the
total net present value (NPV) of rents will increase with the
extension of the notional term so that a revised return will be
required.
Where no SDLT was initially chargeable, the extended term may
bring the total NPV within charge so that notification should be
made using form SDLT1 and (where appropriate) forms SDLT 2, 3 and
4. This should be made by letter to
The
Compliance Team, Birmingham Stamp Office within 30 days of the
day after expiry of the notional first 12-month term.
If the lease continues after the two-year term has expired,
it is then treated as a notional lease for three years from the
date of grant (or deemed grant), with notification or revised
return (if required) as before.
If the lease continues after the three-year term has expired,
it is treated as a notional lease for four years from date of grant
(or deemed grant) and so on, until the lease is determined or a new
lease is granted.
Note that a lease for an indefinite term will not come within
the notification requirements merely because its notional term has
been extended to seven years or more, as notification is only
required when the lease,
when granted, is for a term of seven
years or more and the grant is for chargeable consideration. Refer
to FA03/S77(2)(a).
