SDLT on lease renewals cannot always be correctly calculated using the HMRC SDLT calculator due to complex rules in relation to the term start date.
On a non-residential lease renewal, the Term for the purposes of the SDLT calculator may be:
– the contractual start date;
– the date of grant or the contractual start date (whichever is later);
– the date after the first full year of holding over; or
– the day after the term end date of the former lease.
This will depend on numerous factors such as whether the former lease was within the SDLT regime, whether the new lease is contracted-out, whether the term of the new lease is backdated, whether the new lease is granted within a year of expiry of the former lease and whether the contractual start date of the new lease is within one year of expiry of the former lease.
HMRC’s calculator is not equipped to deal with the above and it is a demanding task for any solicitor to be aware of the particular SDLT rules to apply to a lease renewal let alone follow it up with the requisite calculations to assess SDLT. POROS prompts solicitors to ascertain the requisite information with a series of questions before assessing the correct term start date.
For all lease renewals, it is therefore recommended that solicitors use POROS.
For more information, please contact us at [email protected]