SDLT on Commercial Leases: The NPV Charge
Written by Scott Jones, founder of CommercialPropertyKiln · Last updated
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When you grant a new commercial lease, SDLT can be due on the rent as well as on any premium. The rent is charged on its net present value (NPV).
Two separate charges
- Premium: taxed at the freehold non-residential rates (0%, 2%, 5%). See commercial SDLT.
- Rent: taxed on the NPV of the rent payable over the lease term.
How the NPV works
The total rent over the term is discounted at 3.5% a year to give a present-day value. SDLT on that NPV is then:
- Up to 150,000: 0%
- 150,000 to 5,000,000: 1%
- Above 5,000,000: 2%
So on a lease with a modest rent, the NPV often falls below 150,000 and no SDLT is due on the rent. On higher rents or longer terms it can add up.
Assigned leases are different
When you take an assignment of an existing lease, SDLT is charged on the price paid for the lease, not on an NPV of the rent. The NPV charge applies only on the grant of a new lease.
Work it out
Our commercial stamp duty calculator does the NPV calculation and the premium charge together.
Do I pay SDLT on the rent of a commercial lease?
On a new lease, yes: the rent is charged on its net present value, discounted at 3.5% a year, at 0% up to 150,000, 1% to 5,000,000 and 2% above.
Is an assigned lease charged on the rent NPV?
No. On an assignment, SDLT is charged on the price paid for the lease, not on an NPV of the rent.