Solicitors Qualifying Examination (SQE) Practice Exa\

When understanding the payment of Stamp Duty Land Tax (SDLT) and Value Added Tax (VAT) in relation to a commercial lease, it's essential to recognize that both taxes may be applicable under certain circumstances. The key point in the context of a commercial lease is that SDLT is triggered when a lease is granted, particularly concerning any premium paid as well as the rent reserved.

In this scenario, when a commercial lease is granted, if there is a premium (which is an upfront payment made by the tenant) along with the rent that will be paid over the term of the lease, both elements are taken into account for calculating any SDLT due. Hence, SDLT applies not only to the rent but also to any upfront premium associated with the lease.

Furthermore, VAT may also be chargeable on the rent and premium, depending on the landlord's VAT registration and whether they have opted to tax the property. If the landlord opts to tax, then both the rent and any premium would typically incur VAT.

Thus, the correct understanding of when SDLT and VAT are payable on a commercial lease aligns with the premise that both taxes are assessed upon the granting of the lease, encompassing any premium and the rent reserved. This dual obligation is crucial for tenants and