Tenants often find themselves holding over between leases and whilst solicitors are instructed to act on the renewal, they rarely consider the holdover period and whether any further SDLT may have arisen.
Where a lease is not contracted out of the Landlord and Tenant Act 1954 and a tenant remains in occupation until a new lease is granted, HMRC may require a further Return be submitted capturing the period between the expiry of the term of the former lease and the grant of the new lease. This is known as a growing lease. This Return will assess whether any additional SDLT is payable and failure to attend to the same will attract the usual penalties and interest.
Whether a further Return is required depends on the following:
(1) whether the new lease is granted within one year of expiry of the former lease;
(2) whether the term of the new lease is backdated to expiry of the former lease; and
(3) whether the contractual start date of the new lease is within one year of expiry of the former lease.
HMRC’s calculator is strictly for new leases and does not calculate the SDLT liability arising from a growing lease. POROS’ Non-Residential Lease Renewals calculator will identify whether a Return is required for any holdover period and will refer the user to its Growing Lease calculator to assess the liability arising. Solicitors are therefore not only prompted to consider the same but given the tools to be able to make the requisite assessment.
For more information, please contact us at [email protected]