Schedule 19 – Leases Part 5 – Chargeable Consideration: Rent and Consideration Other Than Rent
281.Part 5 makes provision about what counts, or does not count as chargeable consideration when calculating the tax chargeable for a lease. Paragraph 12 makes provision about certain aspects of rent generally, although “rent” is not as such defined.
282.Paragraph 13 sets out the rules for determining the rent payable under a lease where the rent varies in accordance with provisions in the lease or where a rent is contingent, uncertain or unascertained. This will be necessary for the purposes of calculating the tax due on the rent under, for example, paragraphs 4, 5, 10 and 11. The effect of sub-paragraph (5) is limited to just paragraph 13 (variable or uncertain rent) itself.
283.Paragraph 14 provides that, in the case of the grant, assignation or renunciation of a lease, a reverse premium does not count as chargeable consideration. Sub-paragraph (2) defines what a “reverse premium” means.
284.Paragraph 15 sets out a list of tenants’ obligations (for example, any undertaking by the tenant to repair, maintain or insure the leased premises) which in the case of the grant of a lease do not count as part of the chargeable consideration.
285.Paragraph 16 clarifies that where there is an assignation of a lease, then the assumption of the responsibilities by the assignee (the person to whom the lease is assigned) to pay rent or any other obligation of the tenant under the lease do not count as chargeable consideration for the assignation.
286.Paragraph 17(1) provides that where a tenant, or any person connected with or acting on behalf of the tenant, makes a loan or pays a deposit (whether to the landlord or to a third party), the repayment of which is contingent on anything to be done or not to be done by the tenant or on the death of the tenant, then the amount of the loan or the deposit is to be treated as consideration other than rent paid by the tenant for the grant of the lease. Sub-paragraph (2) makes similar provision to sub-paragraph (1) in relation to arrangements in connection with the assignation of a lease. Sub-paragraph (3) provides that sub-paragraphs (1) and (2) do not apply where the deposit does not exceed twice the relevant maximum rent. Sub-paragraph (4) defines the relevant maximum rent in relation to the grant of a lease as the highest amount of rent payable in respect of any consecutive 12 month period during the term of the lease - and in relation to the assignation of a lease, it is the highest amount of rent payable in respect of any consecutive 12 month period during the term of the lease remaining outstanding at the date of the assignation. Sub-paragraph (5) makes further provision for determining the highest amount of rent for the purposes of sub-paragraph (4). Sub-paragraph (6) provides that tax is not chargeable under this paragraph if it would be chargeable only because of the effect of paragraph 9(2). Paragraph 9(2) excludes the nil rate tax band where the relevant rent attributable to non-residential property is less than £1,000 per year.
287.Paragraph 18 makes provision for the renunciation of an existing lease in return for a new lease between the same parties In such cases, the grant of the new lease does not count as chargeable consideration for the renunciation and the renunciation does count as chargeable consideration for the grant of the new lease. Sub-paragraph (2) provides that paragraph 5 (exchanges) of schedule 2 (chargeable consideration) does not apply in such a case.