SDLTM15025 – Variation of leases: Reducing the rent payable: Example 1

L grants a lease to T:

• of non-residential property
• on 1 December 2000
• for a term of 35 years
• at a rent of £650,000 per annum
• subject to upward only rent reviews every five years.

On 1 July 2005 T pays L £10,000,000 to reduce the rent for the remainder of the term to a peppercorn.

A land transaction return and payment of £400,000 tax would be required no later than 31 July 2005 as the payment by the tenant to the landlord to reduce the rent is liable to tax at 4% of £10,000,000.