Rent reviews have SDLT implications

Tuesday, December 02, 2008

Businesses have been told to consider the impact of rent reviews on the amount of stamp duty land tax they must pay.

Rent reviews can have implications for the amount of stamp duty land tax (SDLT) which must be paid, it has been asserted.

Law firm Shoosmiths explains that the responsibility for calculating the impact of any rent reviews depends on how long the business lease has been in place.

For leases which have existed for more than five years, it is up to the tenant to determine whether they may be required to pay additional SDLT.

Tom Wilde, solicitor at Shoosmiths, suggests that rent reviews which occur five years apart must set an increase of less than 20 per cent per annum to avoid being termed "abnormal" by HM Revenue and Customs (HMRC).

Should abnormal rent reviews occur, however, HMRC must be notified and any additional SDLT paid.

Rent reviews within the first five years, meanwhile, should have been covered in the initial calculation of SDLT, with HMRC to be informed only if the increase is beyond projections.

Shoosmiths recently noted the introduction by HMRC of a facility to allow firms having problems meeting their tax payments to obtain a revised payment schedule on which interest but no penalty charges must be paid.

Source: ask-re The Property People LLP