Read the original guidance here:
HMRC SDLT: Guidance on SDLT Procedures for Uncertain Rent Becoming Certain and Required Actions

Understanding Changes in Rent for SDLT Purposes

This guidance explains what to do when the rent for a property has changed after you have submitted a Stamp Duty Land Tax (SDLT) return. It covers different scenarios, including what steps to take based on whether tax was due at the time of the original return or not. The examples provided will clarify the process.

1. No Tax Due on Original Return

In the first case, you submitted an SDLT1 return without any tax being due. This might happen when:

• The rent you estimated had a net present value (NPV) that was below the tax threshold.

If the actual rent has now been determined, and it is higher than the original estimate, you will need to submit a further return. This will be in the form of a letter to the Stamp Office. The letter should include:

• Unique Tax Reference Number (UTRN): This is from your original return.
• Details of Actual Rents: Specify the actual rent amount now that it is known.
• Tax Self-Assessment: Calculate the tax based on the new information.
• Payment of Tax Due: If you owe any tax based on the updated calculation, include this with your submission.

2. Tax Paid on Original Return

If you already submitted a return with an estimated rent that required you to pay SDLT, and the actual rent has now been confirmed, you will also need to submit a further return. This should also be in the form of a letter to the Stamp Office, including:

• UTRN of the Original Return: This helps HMRC identify your case.
• Details of Actual Rent: Provide the confirmed amount of rent.
• Tax Self-Assessment: Reassess the tax liability based on the actual rent.
• Payment of Additional Tax or Claim for Refund: If the original estimate was too low, pay the additional tax owed. If it was too high, request a refund for the excess amount.

3. Original Transaction Not Notifiable

If your original estimated rent was below the notification threshold, you may not need to take any action if the actual NPV remains below the threshold. However, if the actual NPV exceeds the threshold, you must complete an SDLT1 form that includes all relevant transaction details. Your submission must have:

• The actual rent amounts.
• The effective date should be the same as the original transaction date.

Keep in mind that if you submit this return within 30 days after knowing the actual rent, you will not face any penalties. However, from 1 March 2019, the deadline changed to 14 days after knowing the actual rent.

4. Importance of Timeliness for Returns

If you underestimate the rent and end up owing more tax, interest will begin accruing from thirty days after the original effective date. If you have overestimated and are due a tax refund, interest will apply from the date HMRC receives the claim. This procedure also transitioned on 1 March 2019, meaning interest on tax payable starts from 14 days after you confirm the effective date.

5. Examples to Illustrate Key Points

To make this clearer, let’s look at some examples:

Example 1: No Tax Due, Rent Estimated Below Threshold

Let’s say you estimated the annual rent for a property as £8,000. This gives an NPV below the SDLT threshold. Months later, the actual rent is confirmed to be £12,000, increasing the NPV over the threshold. You would write to the Stamp Office with the following:

• Your UTRN from the original submission.
• Confirm the actual rent is now £12,000.
• Calculate the SDLT based on £12,000.
• Include payment for any additional tax owed based on this revised assessment.

Example 2: Tax Paid, But Rent Higher Than Estimate

Imagine you originally estimated the rent at £10,000, leading to paying SDLT on that amount. Subsequently, the actual rent is determined to be £15,000. Here’s what to do:

• Provide your UTRN.
• Update details of the actual rent as £15,000.
• Reassess the SDLT owed based on this new figure.
• If you owe more, include payment for the additional tax. If you’ve overpaid, request a refund.

Example 3: No Notification Required Initially

Your original estimated rent was £7,000, thus not notifying HMRC since it is below the threshold. If you later find the actual rent is £9,000, which crosses the threshold, you need to:

• Fill out the SDLT1 form.
• Indicate the actual rent of £9,000.
• Submit the return to the Stamp Office within the allowed time frame to avoid penalties.

6. Special Notes on Penalties and Interest

There are important considerations regarding penalties and interest:

• If you fail to submit on time after knowing the actual rent, there may be penalties imposed.
• Your tax interest obligations begin accruing after the specified periods, so take care to submit all returns punctually.

By following these guidelines carefully, you can ensure that your SDLT obligations are met and that you remain compliant with HMRC requirements.