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(2) Where sub-paragraph (1) applies in relation to an obligation, a payment | |
made in discharge of the obligation does not count as chargeable | |
consideration. | |
(3) The assumption or (as the case may be) release of any such obligation as is | |
mentioned in sub-paragraph (1) does not count as chargeable consideration | 5 |
in relation to the assignment or surrender of the lease. | |
Surrender of existing lease in return for new lease | |
14 (1) This paragraph applies where a lease is granted in consideration of the | |
surrender of an existing lease— | |
(a) of the same or substantially the same premises, | 10 |
(b) of which the unexpired term is substantially the same as the term of | |
the new lease, and | |
(c) on the same or substantially the same terms. | |
(2) Where this paragraph applies— | |
(a) the grant of the new lease does not count as chargeable consideration | 15 |
for the surrender, and | |
(b) the surrender does not count as chargeable consideration for the | |
grant of the new lease. | |
Reverse premium | |
15 (1) In the case of the grant, assignment or surrender of a lease a reverse | 20 |
premium does not count as chargeable consideration. | |
(2) A “reverse premium” means— | |
(a) in relation to the grant of a lease, a premium moving from the | |
landlord to the tenant; | |
(b) in relation to the assignment of a lease, a premium moving from the | 25 |
assignor to the assignee; | |
(c) in relation to the surrender of a lease, a premium moving from the | |
tenant to the landlord. | |
Indemnity given by purchaser | |
16 Where the purchaser agrees to indemnify the vendor in respect of liability to | 30 |
a third party arising from breach of an obligation owed by the vendor in | |
relation to the land that is the subject of the transaction, neither the | |
agreement nor any payment made in pursuance of it counts as chargeable | |
consideration. | |
Schedule 5 | 35 |
Section 56 | |
Stamp duty land tax: amount of tax chargeable: rent | |
Introduction | |
1 This Schedule provides for calculating the tax chargeable— | |
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(a) in respect of a chargeable transaction for which the chargeable | |
consideration consists of or includes rent, or | |
(b) where such a transaction is to be taken into account as a linked | |
transaction. | |
Calculation of tax chargeable in respect of rent | 5 |
2 (1) Tax is chargeable under this Schedule in respect of so much of the chargeable | |
consideration as consists of rent. | |
(2) The tax so chargeable is a percentage of the net present value of the rent | |
payable over the term of the lease. | |
(3) That percentage is determined by reference to whether the relevant land— | 10 |
(a) consists entirely of residential property (in which case Table A below | |
applies), or | |
(b) consists of or includes land that is not residential property (in which | |
case Table B below applies), | |
and, in either case, by reference to the amount of the relevant rental value. | 15 |
| | Table A: Residential | | | | | Relevant rental value | Percentage | | | | | Not more than £60,000 | 0% | | | | | More than £60,000 | 1% | | |
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| | Table B: Non-residential or mixed | | 20 | | | Relevant rental value | Percentage | | | | | Not more than £150,000 | 0% | | | | | More than £150,000 | 1% | | |
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(4) For the purposes of sub-paragraph (3)— | |
(a) the relevant land is the land that is the subject of the lease, and | 25 |
(b) the relevant rental value is the net present value of the rent payable | |
over the term of the lease, | |
subject as follows. | |
(5) If the lease in question is one of a number of linked transactions for which | |
the chargeable consideration consists of or includes rent— | 30 |
(a) the relevant land is any land that is the subject of any of those leases, | |
and | |
(b) the relevant rental value is the total of the net present values of the | |
rent payable over the terms of those leases. | |
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Net present value of rent payable over term of lease | |
3 The net present value (v) of the rent payable over the term of a lease is | |
calculated by applying the formula:![equation: equal[char[(*f"Garamond"fV"Regular"V*)v],sum[over[indexes[0,1,char[r],char[i]],indexes[
1,0,id[plus[num[1.00000000,"1"],char[T]]],char[i]]],equal[char[i],num[1.00000000,
"1"]],char[n]]]](missing.gif) | |
where— | |
ri is the rent payable (see paragraphs 4 and 5) in year i, | 5 |
i is the first, second, third, etc year of the term, | |
n is the term of the lease (see paragraphs 6 and 7), and | |
T is the temporal discount rate (see paragraph 8). | |
Rent payable | |
4 (1) For the purposes of this Schedule a single sum expressed to be payable in | 10 |
respect of rent, or expressed to be payable in respect of rent and other | |
matters but not apportioned, shall be treated as entirely rent. | |
This is without prejudice to the application of paragraph 4 of Schedule 4 | |
(chargeable consideration: just and reasonable apportionment) where | |
separate sums are expressed to be payable in respect of rent and other | 15 |
matters. | |
(2) Subject to paragraph 5 (effect of provision for rent review), section 51 | |
(contingent, uncertain or unascertained consideration) applies in relation to | |
rent as in relation to other chargeable consideration, but no application may | |
be made under section 90 (application to defer payment in case of contingent | 20 |
or uncertain consideration) in respect of tax chargeable under this Schedule. | |
(3) No account shall be taken for the purposes of this Schedule of any provision | |
for rent to be adjusted in line with the retail price index. | |
Effect of provision for rent review | |
5 (1) This paragraph applies where the lease contains provision for adjustment of | 25 |
the rent, as from a specified date or dates, to reflect current market values. | |
(2) In this paragraph— | |
(a) a “rent review” means an adjustment in pursuance of such provision, | |
and | |
(b) references to the date of a rent review are to the date from which any | 30 |
such adjustment has or would have effect. | |
(3) If the lease provides for a rent review on or before the end of the second year | |
of the lease, section 51 (contingent, uncertain or unascertained | |
consideration) applies in relation to the possibility that the rent may be | |
adjusted on that review. | 35 |
(4) If the lease provides for a rent review after the end of the second year of the | |
lease, the annual rent payable after that review— | |
(a) is determined without regard to the possibility of an adjustment on | |
that review, and | |
(b) is assumed to be the same as the annual rent payable over the year | 40 |
preceding the first rent review or, if the period from the beginning of | |
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the term of the lease to the date of the first rent review is less than a | |
year, over that period. | |
Term of lease | |
6 (1) For the purposes of this Schedule the term of a lease is determined as | |
follows. | 5 |
(2) Subject to the following provisions of this paragraph, the term of a lease is— | |
(a) the contractual term specified in the lease, or | |
(b) if shorter, the period from the date of the grant of the lease until the | |
end of the contractual term. | |
(3) Where in England and Wales or Northern Ireland— | 10 |
(a) an agreement for a lease is entered into, | |
(b) the agreement is substantially performed otherwise than by | |
completion, and | |
(c) a lease is subsequently granted in pursuance of the agreement, | |
the term of a lease is the period from the date of substantial performance of | 15 |
the agreement until the end of the contractual term specified in the lease. | |
In this sub-paragraph “substantially performed” and “completion” have the | |
same meanings as in section 44 (contract and conveyance). | |
(4) Notwithstanding anything in sub-paragraph (2) or (3), a lease granted by | |
way of renewal of a previous lease is treated as if its term had begun on the | 20 |
expiry of the previous lease. | |
This applies, in particular, to leases granted under Part 2 of the Landlord and | |
Tenant Act 1954 (c. 56) or under the Business Tenancies (Northern Ireland) | |
Order 1996 (S.I. 1996/725 (N.I. 5)). | |
(5) No account shall be taken of any right of either party to determine the lease | 25 |
or to renew it. | |
Treatment of lease for indefinite term | |
7 (1) For the purposes of this Schedule a lease for an indefinite term is treated as | |
if it were a lease for a term of 12 years. | |
(2) Sub-paragraph (1) applies, in particular, to a lease expressed to be— | 30 |
(a) perpetual, | |
(b) for life, or | |
(c) determinable on the marriage of the lessee. | |
(3) No account shall be taken for the purposes of this Schedule of any statutory | |
provision deeming such a lease to be a lease for a longer definite term. | 35 |
Temporal discount rate | |
8 (1) For the purposes of this Schedule the “temporal discount rate” is 3.5% or | |
such other rate as may be specified by regulations made by the Treasury. | |
(2) Regulations under this paragraph may make any such provision as is | |
mentioned in subsection (3)(b) to (f) of section 178 of the Finance Act 1989 | 40 |
(c. 26) (power of Treasury to set rates of interest). | |
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(3) Subsection (5) of that section (power of Inland Revenue to specify rate by | |
order in certain circumstances) applies in relation to regulations under this | |
paragraph as it applies in relation to regulations under that section. | |
Tax chargeable in respect of consideration other than rent | |
9 (1) Where in the case of a transaction to which this Schedule applies there is | 5 |
chargeable consideration other than rent, the provisions of this Part apply in | |
relation to that consideration as in relation to other chargeable | |
consideration. | |
(2) If the annual rent exceeds £600 a year, the 0% band in the Tables in | |
subsection (2) of section 55 does not apply and any case that would have | 10 |
fallen within that band is treated as falling within the 1% band. | |
(3) For the purposes of sub-paragraph (2) the “annual rent” means the average | |
annual rent over the term of the lease or, if— | |
(a) different amounts of rent are payable for different parts of the term, | |
and | 15 |
(b) those amounts (or any of them) are ascertainable at the effective date | |
of the transaction, | |
the average annual rent over the period for which the highest ascertainable | |
rent is payable. | |
(4) Tax chargeable under this Schedule is in addition to any tax chargeable | 20 |
under section 55 in respect of consideration other than rent. | |
(5) Where a transaction to which this Schedule applies falls to be taken into | |
account for the purposes of that section as a linked transaction, no account | |
shall be taken of rent in determining the relevant consideration. | |
Increase of rent treated as grant of new lease | 25 |
10 (1) Where a lease is varied so as to increase the amount of the rent, the variation | |
is treated for the purposes of this Schedule as if it were the grant of a lease in | |
consideration of the additional rent made payable by it. | |
(2) Sub-paragraph (1) does not apply to an increase of rent in pursuance of a | |
provision already contained in the lease. | 30 |
Interpretation | |
11 In Scotland any reference in this Part to the term of a lease is to the period of | |
the lease. | |
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