lease renewal tax advice
the challenge:
Our client wished to extend the term of its lease on premises in
central London and was keen to minimise the stamp duty land tax
(SDLT) payable on the grant of the new lease. We looked at
different ways of structuring the lease renewal with our
client. Additional complexities centred around interaction of
the old stamp duty rules and SDLT legislation on leases, as the
original lease had been granted prior to 1st December 2003.
our approach:
We decided on using a reversionary lease, i.e. where the lease
is entered into ‘now’, but with its term set to commence at an
agreed date in the future. As there were still a few years to
run on the existing lease, by agreeing with the landlord that the
term of the reversionary lease would begin when the current lease
expired, we were able to build in some SDLT saving compared to
using an immediate surrender and re-grant of the lease.
the result:
We not only recommended a lease which met our client’s requirements
but our SDLT solution was agreed with HM Revenue & Customs and
achieved a six figure SDLT saving for our client.