SDLTM17120 - Miscellaneous
Provisions: ‘'Rent'’ payable for a period before grant:
Example 2
A business lease is being held over pending negotiation of a
new lease. The final rent being paid under the ‘old’
lease was £50,000 per annum, which is also being paid during
the period of holding over. The expiry of the express term of the
‘old’ lease was 31 December 2004.
The new lease is granted on 1 July 2006 at a rent of
£70,000 from 1 January 2005. Depending on the facts, the tax
treatment is as follows
- ‘old’ lease granted under stamp duty; increase in
rent in holding over period is
not for grant of new lease:
- the £50,000 rent paid during holding
over is ignored (refers to old lease so outside scope of stamp duty
land tax (SDLT))
- the £20,000 increase is treated as
the grant of a new lease for 18 months at £20,000 per year
(but only if the old lease was granted after 1 January 2000)
- ‘old’ lease granted under stamp duty; increase in
rent in holding over period
is for grant of new lease:
- the £50,000 rent paid during holding
over is ignored
- the £20,000 per annum increase for 18
months is treated as premium for the new lease, that is,
£30,000 is taxed as premium
- ‘old’ lease granted under SDLT; increase in rent in
holding over period
is not for grant of new lease:
- the £50,000 rent paid during holding
over is taken into account for the new NPV of the growing
‘old’ lease
- the £20,000 increase is treated as
the grant of a lease for 18 months at £20,000 per year. NPV is
returned if taxable
- ‘old’ lease granted under SDLT; increase in rent in
holding over period
is for grant of new lease:
- the £50,000 rent paid during holding
over is taken into account for the new NPV of the growing
‘old’ lease
- the £20,000 per annum increase for 18
months is treated as premium for the new lease, that is,
£30,000 is taxed as premium.
