Solicitors Qualifying Examination (SQE) Practice Exa\

When a lease includes both a premium and rent, it is necessary to understand how Stamp Duty Land Tax (SDLT) is assessed on commercial leases. The correct interpretation here is that SDLT is charged on both the premium and the rent.

The SDLT regulations specify that if a premium is paid for the lease, it is treated as a consideration for the acquisition of a leasehold interest and is therefore subject to SDLT. In addition to that, the rent (or other periodic payments) associated with the lease is also subject to SDLT. This means that both components contribute to the total amount of SDLT payable.

In applying the SDLT, the tax authorities will assess both the upfront premium and the annual rent to determine the overall charge. This ensures that the total value exchanged in respect of the leasing transaction is effectively captured by the tax. This dual consideration for SDLT reflects the nature of commercial agreements, where both initial and ongoing payments represent the value of the leased property.

Understanding this allows individuals and businesses to accurately calculate their SDLT liabilities when entering into lease agreements, ensuring compliance with tax obligations.