SolvedSDLTM13220 | Calculation of stamp duty: Rent: Variable or uncertain rent: Example 5
From HM Revenue & Customs · Stamp Duty Land Tax Manual
A lease for a term of seven years is granted on 1 April 2018, with an initial rent of£100,000 per annum which is increased by 4% per year.
Because the rent is variable, the calculation of net present value (NPV) of this lease is based on the known rent increases for each of the first five years only, with NPV for years 6 and 7 being based on the highest rent paid in any twelve - month period in the first five years (in this example months 49 - 60).
The figures used would be:
| Year 1 | £100,000 |
|---|---|
| Year 2 | £104,000 |
| Year 3 | £108,160 |
| Year 4 | £112,486 |
| Year 5 | £116,986 |
| Year 6 | £116,986 |
| Year 7 | £116,986 |
The calculation will not require review because the known rent increases are included inthe original NPV calculation and are not estimated or contingent.