Stamp Duty Land Tax Tenancy Agreement

If the lease is valid for a period of 12 months and no SDLT/LBTT/LTT is due, given that the consideration is below the SDLT/LBTT/LTT threshold, and then the lease is extended for a further 12 months, so that the total rent for the 24 months exceeds the SDLT/LBTT/LTT threshold, an SDLT/LBTT/LTT return must be submitted to HMRC. Revenue Scotland or the Welsh Revenue Authority and the additional tax paid. If the lease is valid for 12 months and then extended for another 12 months, an additional SDLT/LBTT/LTT declaration must be filed with HMRC/Revenue Scotland/Welsh Revenue Authority and the additional tax must be paid. This is called tied leasing (see below). “This is probably because the tenant knows that the levy is due and that the tax is voluntarily re-redeemable at HMRC. Unsurprisingly, this is rare in practice,” he says. The 1% tax must normally be paid within 30 days of the start of the lease or the date on which the lease was executed, whichever is earlier. This is done via an SDLT1 form. For example, tenants of long-term leases and those who pay higher monthly rents are covered under this HMRC-SDLT clause. SDLT may be payable when a lease is awarded and is calculated by reference to the “Net Present Value”, i.e. the total rent paid. If you have paid enough rent to a landlord, which is quite possible if you rent a large commercial property, you may owe HMRC stamp duty.

Our tax advisors will guide you when you may need to pay and how much you may owe. To put things in the right perspective, if the cumulative rents over the life of your office rental are £200,000, you pay 1% off the £50,000 or £500 deductible. If the cost of your rental is less than £50,000, you are exempt in total. Paul Ives of the Letting Centre says: “This is a little-known tax branch. There are few high rents of this level, so we rarely stumble upon it, and for the few tenants who pay those high rents, we think it is rarely paid or declared, and there is no active application. A case of poorly thought out law that most people ignore. » If the tenant does not make a payment or token fee (peppercorn), there is no delivery and therefore no change in the tax debt of the delivery provided by the landlord to the tenant. If the tenant accepts a new lease with new conditions, he does not only deliver to the lessor by consent. Liability for the delivery of the new rental contract by the lessor is exempt, unless the lessor has decided to tax his interest in the property and the option is not excluded or is not applied. The total value paid by the SDLT/LBTT/LTT tenant (sometimes referred to as “consideration” is usually the total rent for the duration of the lease. In fact, the most painful part of the process can be the fines HMRC collects for non-payment, so check your lease and make sure you have all the vouchers on hand and take into account the extra tax.

If it`s too difficult to keep an overview of all your payments and income, outsource your accounting to a certified accountant. Quirk adds: “Stamp duty is in any case a draconian tax, a burden that was imposed on public opinion in 1694 to wage war against France, which now reaps more than £9 billion each year from emerging owners whose `crime` is at the origin of the tax only of owning real estate.

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