SDLTM50260 | Procedure: Completion following Substantial Performance of agreement for lease

If an agreement for the grant of a new lease is substantially performed (treated as the grant of a notional lease – see SDLTM17010), and then a lease is granted pursuant to the agreement (the actual lease), a further return may be due on actual completion.

The rules for filing a further return in these circumstances changed on 17 July 2013.

If the actual lease is granted on or after 17 July 2013:

The notional lease and actual lease are treated as a single lease, granted on the date of substantial performance.

The notional lease and actual lease will be regarded as linked transactions, and a further return will be required on grant of the actual lease if more tax is due. If no additional tax is due, notification is not required.

The lessee under the actual lease will be liable for any additional tax due.

If the notional lease was notified, then a further return should be delivered before the end of 30 days from the effective date of the actual transaction.

The further return should be a letter sent to the Stamp Office at this address and should contain the following details:

• UTRN of the original return

• Details of the new calculation

• Appropriate payment for the additional tax due

If the notional lease was not notified, and the effect of the grant of the actual lease is that tax is now due, then an SDLT1 must be delivered before the end of 14 days from the effective date of the actual transaction.

If the actual lease was granted before 17 July 2013:

The grant is treated as a completely separate transaction (although linked to the notional transaction), overlap relief will be available.

As a result, the further return will be a new SDLT1 (and not a letter) sent to this address.

However, if the NPV is nil because of the overlap relief, no notification is required.

Please note that application of overlap relief cannot lead to a negative figure, so no refund will be available if the tax calculation on the grant of the lease is less than that paid on substantial performance.