Is SDLT payable on a lease to a connected company?

[Angela]

My understanding is that s53 FA2003 charges SDLT on the difference between: the actual rent charged on the lease of a property to a connected company; and, what would be the market rent; If, however, no rent is charged, does s53 mean that the normal SDLT charge on the market value of the property, rather than the marklet value of the rent?

The Revenue manuals cite an example at SDLTM30222 which I can’t relate to s53.

Any thoughts appreciated.

[Patrick]

Yes SDLTM30222 is not as clear as it could be. The market value under s53(1A)(a) should reflect any actual rent payable under the lease referred to in (b). So for example if a market value rent is charged there should be little or no additional value to be taxed under (a). To the extent that SDLTM30222 could be read as authorising a market value charge on a notional peppercorn lease and then adding in any rent actually charged, this is incorrect and confusing.

[Angela]

Many thanks for your response, Patrick.

Kind regards,

Angela.

[Author]

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