Stamp duty on lease rent reviews: working out the rent figure
Rent reviews and SDLT
A rent review can change the rent figure used for stamp duty on a lease. The result depends mainly on when the first review takes effect.
- Estimate uncertain rent in the first five years.
- Keep evidence for that estimate.
- Use the highest first-five-year annual rent for later years.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty on lease rent reviews: working out the rent figure
Stamp duty on lease rent reviews: working out the rent figure
A rent review can affect the stamp duty due on a lease, even when nobody knows the new rent, and if the review falls in the first five years, you usually need a sensible estimate. A later review works differently.
What this rule is about
Stamp Duty Land Tax, often called stamp duty or SDLT, can apply to rent under a lease. It uses a net present value, or NPV, to turn rent due over the lease into one figure.
A rent review can change the rent later, so the future rent becomes variable; the timing of the first review then decides whether the law uses the first-five-years method or the method for reviews after that point. Timing matters.
What the official source says
HMRC’s manual says that, when a lease has a rent review in its first five years, the rent is variable and uncertain at the start, although HMRC guidance is not law. It reflects the legislation’s rule for uncertain rent.
- For rent due in the first five years, make a reasonable estimate of the amount payable.
- You do not always need a professional valuation to make that estimate.
- Keep evidence showing how you reached the figure.
- If the review falls after year five, disregard that review when working out the NPV.
- For years after year five, use the highest rent due in any consecutive twelve-month period within the first five years.
- Some rent changes allowed by agricultural tenancy law receive the same treatment.
The point is easy to miss: a review after year five does not make later rent disappear, because the later years instead use the highest annual rent found during the first five years. Later rent still counts.
What this means in practice
Start with the lease wording, rather than assuming what the landlord expects to charge. Find the first point when the rent can change, then check whether the lease already fixes the new amount.
If the amount is not fixed and the review takes effect within five years, use a reasonable estimate in the initial SDLT calculation, with a clear basis rather than a bare guess. Record the basis.
- Read the review clause and any side letter.
- Check the exact lease start date.
- Check when the new rent takes effect, rather than when talks may begin.
- Record comparable rents, a formula, forecasts, or other facts used for the estimate.
- Keep the calculation with the SDLT file.
What if the review is after year five? Do not predict the reviewed rent for the later period. Use the highest rent from a consecutive twelve-month period in the first five years instead.
How to analyse it
Work through the dates first, because a review that appears to be a fifth-year review may fall within a special rule when its stated date is five years after a date shortly before the lease began. Check the dates closely.
- Identify every clause that can change the rent.
- Decide whether the rent varies, is uncertain, or is already fixed.
- Find the first review date that changes an uncertain amount.
- Ask whether that date falls before the end of the fifth lease year.
- If it does, make and record a reasonable estimate.
- If it does not, find the highest consecutive twelve-month rent in the first five years.
- Check whether the special rule for a review near the end of year five changes the result.
- For an agricultural lease, check whether statutory review rights can alter the rent.
This is where people get it wrong: use the date when the rent adjustment takes effect under the lease, not the date when either side starts discussing it. Discussions do not decide it.
Example
Amir takes a ten-year shop lease at £40,000 a year, and a year-three review will set a new market rent that remains unknown when he signs. For the first five years, he uses a reasonable estimate of £46,000 after the review and keeps supporting evidence, such as comparable local rents.
Now change one fact. If the first market-rent review takes effect in year six instead, Amir does not estimate that future market rent for the NPV. For rent after year five, he uses the highest rent in any consecutive twelve-month period during years one to five. On these facts, that is £40,000.
Why this can be difficult in practice
Lease clauses do not always use clear labels, and a clause called an uplift, turnover payment, or adjustment may still make rent vary, so check its effect rather than its heading. Names can mislead.
- A review date may be expressed indirectly.
- A clause can set a minimum rent but leave the final amount uncertain.
- Evidence may support more than one reasonable estimate.
- A review near the fifth anniversary may fall under the special final-quarter rule.
- A rent change linked only to the retail prices index has separate treatment in the legislation.
You might think a later review settles the original estimate. It does not. You still need to show why the estimate was reasonable when the lease began.
Key takeaways
- A first-five-year rent review may require a reasonable estimate.
- Keep clear evidence for the figure you use.
- Later variable rent uses the highest annual rent from the first five years.
Technical analysis
For advisers, and for anyone who wants to check the law behind this page. You do not need this section to understand the guidance above.
Legislation
- FA 2003 Schedule 5 para 3 — calculating the net present value of lease rent
- FA 2003 section 51 — estimating uncertain or unascertained amounts paid
- FA 2003 Schedule 17A para 7 — rent that varies or remains uncertain; treatment of variable rent in first five years; assumed rent after the first five years; agricultural tenancy rent changes treated as uncertain
- FA 2003 Schedule 17A para 7A — first review near the end of year five
Official guidance
The pages below are HMRC’s guidance. Guidance is not law. It sets out how HMRC reads the legislation, and it is not binding on you, on a tribunal or on a court. Where guidance and the legislation differ, the legislation wins. HMRC can also change or withdraw guidance, and it may not cover your facts.
Where this is not settled
- The right estimate depends on the wording of the lease and the evidence available when it is granted.
- Whether the special final-quarter rule applies depends on the stated review date and the lease start date.
Evidence you would need
This kind of case is decided on the facts of the individual property. These are the records that usually settle it, and the ones an adviser would ask you for.
- The signed lease and every rent review clause.
- The lease start date and each review date.
- Documents showing how any estimated rent was worked out.
- Details of any agricultural tenancy rules that can alter the rent.
Explore this with an AI
Readers often want to test their own situation. Copy the prompt below into ChatGPT, Claude or Gemini. It hands the model the actual legislation for this page rather than letting it answer from memory, and tells it to be explicit about what is uncertain. What comes back is information, not advice – check it against the links above.
I am researching UK Stamp Duty Land Tax (SDLT), which applies in England and Northern Ireland. MY QUESTION Stamp duty on lease rent reviews: working out the rent figure [Replace this with your own situation: what you are buying, the price, the dates, who the buyer is, and what you plan to do with the property.] THE LAW THIS TURNS ON - FA 2003 Schedule 5 para 3 - calculating the net present value of lease rent https://www.legislation.gov.uk/ukpga/2003/14/schedule/5/paragraph/3/2025-11-17 - FA 2003 section 51 - estimating uncertain or unascertained amounts paid https://www.legislation.gov.uk/ukpga/2003/14/section/51/2025-11-17 - FA 2003 Schedule 17A para 7 - rent that varies or remains uncertain https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/7/2025-11-17 - FA 2003 Schedule 17A para 7 - treatment of variable rent in first five years https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/7/2025-11-17 - FA 2003 Schedule 17A para 7 - assumed rent after the first five years https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/7/2025-11-17 - FA 2003 Schedule 17A para 7 - agricultural tenancy rent changes treated as uncertain https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/7/2025-11-17 - FA 2003 Schedule 17A para 7A - first review near the end of year five https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/7A/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm13160 HOW I WANT YOU TO ANSWER 1. Work from the legislation above. Read it before answering. Guidance from HMRC is its view of the law, not the law, and does not bind a tribunal or a court. 2. Tell me what the rule actually requires, in plain English. 3. Tell me which facts decide the answer, and which facts would change it. 4. Tell me what evidence I would need to support the position. 5. Be explicit about anything unsettled or fact-sensitive. Do not guess. 6. Your training data has a cutoff and SDLT rates and reliefs change at fiscal events. Say so if you are not sure the law is current. POINTS ALREADY KNOWN TO BE UNCERTAIN ON THIS TOPIC - The right estimate depends on the wording of the lease and the evidence available when it is granted. - Whether the special final-quarter rule applies depends on the stated review date and the lease start date. Do not give me a conclusion you cannot support from the provisions above.
Legislation links show Finance Act 2003 as it stood on 2025-11-17. The law may have changed since, and the rules that apply are those in force on the date of your transaction. The official guidance this page is based on is here.
This page was last updated on 1 September 2026
Useful article? You may find it helpful to read the original guidance here: Stamp duty on lease rent reviews: working out the rent figure
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