SDLT 5 Years On: Not a Happy Birthday for Everyone!

Stamp Duty Land Tax (SDLT) was introduced as a replacement for stamp duty on land transactions on 1st December 2003. It has therefore recently chalked up its fifth birthday - although not many people will be celebrating!

One feature of SDLT that is almost inevitably overlooked is that, in some circumstances, a commercial tenant is obliged to make a subsequent tax return if the level of rent payable increases during the first 5 years of the lease term.

This hidden provision can mean further SDLT if there is a rent review during the first 5 years of the lease or a rent linked to turnover where only an estimate or a minimum figure was available on day one.

Whatever the reason for the change in rent level, the change triggers a requirement to re-assess the amount of SDLT payable. Once ascertained, the tenant is required to submit a further SDLT return and to pay any additional tax that is due as a consequence of the increase in rent.

The good news is that if, on the other hand, the rent reduces then a refund can be claimed.

As in all cases, the return and tax payment is required to be made within 30 days of the event on which the tax arises, failing which both interest and penalties will be invoked.

Therefore, if you are the tenant under a lease that was granted in the last 5 years since the introduction of SDLT and the rent has changed for whatever reason, you should submit a new SDLT return without delay.

This will enable you to reclaim any overpaid SDLT if the rent has gone down - but inevitably may also mean you may need to pay additional tax if the rent has risen.

Richard Gordon says, "If you are in any doubt as to whether or not you are required to make a further return and payment please contact me at rkg@silvermansherliker.co.uk and I will be pleased to advise you.”