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SDLT calculator for a new commercial lease

On a new lease of commercial property in England or Northern Ireland, SDLT is charged on the net present value of the rent over the term: nothing up to £150,000, 1% up to £5 million and 2% above. Any premium is taxed separately at the non-residential rates, and the two are added together.

From the date the lease is granted.

Any part year at the end.

If VAT is charged on the rent, include it: HMRC counts it.

Does the lease set a different rent in years 2 to 5?

For example a rent-free period or a stepped rent. Reviews after year 5 don't change the figure: HMRC uses the highest rent in years 1 to 5 for every later year.

A lump sum paid to the landlord for the lease, if any.

SDLT on the lease

Enter the term and the rent to see the net present value and the tax.

How the net present value works

Each year's rent is divided by 1.035 raised to the number of that year: year 1 by 1.035, year 2 by 1.035², and so on to the end of the term. The results are added up. That total is the NPV (Finance Act 2003, Schedule 5). For every year after the fifth, the rent used is the highest rent in the first five years, whatever the lease says. A part year at the end uses the annual rent shared out by days.

The rates

On the NPV of the rent

SDLT rates on the NPV of a non-residential lease
Portion of the NPVRate
Up to £150,0000%
£150,001 to £5,000,0001%
Above £5,000,0002%

On any premium

SDLT non-residential rates on a lease premium
Portion of the premiumRate
Up to £150,0000%
£150,001 to £250,0002%
Above £250,0005%

Worked examples

LeaseNPV of the rentSDLT
10 years, rent rising from £4,000 to £8,000 over the first five years (HMRC's example, SDLTM13080)£57,192£0
7 years and 123 days at £75,000 a year (HMRC's NPV, SDLTM13095)£477,783£3,277.83
10 years at £40,000 a year, with a £280,000 premium£332,664£5,326.64 (£1,826.64 on the rent, £3,500 on the premium)

In the first, the rent actually payable over ten years is £80,000, but the NPV is lower because later rent is discounted, and years 6 to 10 are taken at £8,000. It is under £150,000, so there's no tax on the rent.

What this calculator leaves out

  • The lease is taken to start on the day it is granted, for a fixed term. Periodic and indefinite tenancies, and terms dated from before the grant, are worked out differently.
  • The rent is the same every year unless you enter years 2 to 5. Turnover rents, index-linked rents and reviews in the first five years need an estimate, and a recalculation later.
  • "Highest rent in any 12 consecutive months" is taken as the highest of the yearly figures you enter.
  • VAT is only included if you include it in the rent you enter.
  • Linked leases, a new lease to the same tenant after a surrender (overlap relief), agreements for lease, mixed-use and residential leases, and reliefs are not covered.
  • England and Northern Ireland only.

For a freehold or an existing lease, the tax is on the price only: see the stamp duty calculator for homes. Reviewing what the lease will cost over its term? The rent review calculator and the business rates calculator help with the rest.

Questions

How is SDLT on a commercial lease worked out?
Two parts, added together. The rent: each year's rent is discounted at 3.5% a year to a net present value (NPV), and the NPV is taxed at 0% up to £150,000, 1% from £150,001 to £5 million and 2% above. The premium, if any: taxed at the non-residential rates of 0% up to £150,000, 2% to £250,000 and 5% above.
Is there SDLT on the rent if I take over an existing lease?
No. If you buy an existing (assigned) lease, you only pay SDLT on the price you pay for it, not on the rent.
Should the rent include VAT?
Yes, if VAT is payable on the rent. HMRC says to include it in the NPV calculation, at 20%.
What about rent reviews?
For every year after the fifth, HMRC takes the rent to be the highest rent payable in any 12 consecutive months of the first five years, whatever the lease actually says. A first review to an unknown figure such as market rent, five years after the start, is ignored if the lease's conditions fit. If the rent in the first five years is uncertain, you estimate it, then recalculate when it's known or after five years, and pay any extra.
Is there still a £1,000 rent rule for premiums?
Not for non-residential leases. From 17 March 2016, the 0% band applies to the premium whatever the rent.
Do I need to send a return if no tax is due?
For a new lease of 7 years or more, yes, unless the premium is under £40,000 and the annual rent under £1,000. For a lease under 7 years, only if there's tax to pay on the premium or the rent. The return and tax are due within 14 days of the effective date.
Does this work for Wales or Scotland?
No. In Wales a new lease pays Land Transaction Tax, with its own rent bands (0% up to £225,000 of NPV, 1% to £2 million, 2% above). Scotland's LBTT has its own lease rules. This calculator covers England and Northern Ireland only.

Sources

Rates checked against these sources on 17 October 2026. Updated . This is a calculation, not advice: Instrukt is not a law firm or a tax adviser.

Taking a new lease?

The rent, the term and any premium are only part of it. Tell us about the lease and we'll introduce you to an independent SRA-regulated solicitor we work with, who will quote before any work starts.

Tell us about the lease