SDLT & Leases – changes to rules

Since 1 December 2003, Stamp Duty Land Tax (SDLT) has been charged on the rent payable over the entire term of the lease. Aside from the huge (on average 400%) increase in the duty payable compared with Stamp Duty, SDLT has imposed substantial compliance obligations necessitating, potentially, multiple returns.

One of the triggers for a further return is the fifth anniversary of the lease. The need for a further return is also triggered where the rent increases after the end of the fifth year by an abnormal amount. The computation of the further tax is complex. While HMRC aims to have an online calculator available by 1 December 2008 (the fifth anniversary of SDLT) we are hopeful that the rules will be amended to enable businesses and advisers to readily determine whether the rules apply.