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Where a lease is varied so that the rent is reduced, the variation is treated under FA03/SCH17A/PARA15A(1) as the acquisition of a chargeable interest by the tenant.

As the tenant already has a major interest (the lease), a land transaction return is only required if the variation is for chargeable consideration exceeding the relevant threshold.

Example 1

L grants a lease to T:

• of non-residential property
• on 1 December 2000
• for a term of 45 years
• at a rent of 拢650,000 per annum
• subject to upward only rent reviews every five years.

On 1 July 2015 T pays L 拢10,000,000 to reduce the rent for the remainder of the term to a peppercorn.

A land transaction return and payment of 拢400,000 tax would be required no later than 31 July 2015 as the payment by the tenant to the landlord to reduce the rent is liable to tax at 4% of 拢10,000,000.

Example 2

L grants a lease to T:

• of non-residential property
• at a rent of 拢100,000 a year
• for a term of 10 years
• with a tenant right to break at the fifth year.

In consideration of T agreeing not to exercise the break right, L agrees to reduce the rent to 拢80,000 a year.

Whether that agreement (not to exercise the break clause) is documented as a variation to the lease to remove the break right, or simply as a payment for T鈥檚 agreement not to exercise the right, there is a deemed variation of the lease under FA03/SCH17A/PARA15A(1) being the acquistion of a chargeable interest by the tenant.

However, T has not given any chargeable consideration for the acquisition (as the giving up of a right is not consideration in money or money鈥檚 worth under FA03/SCH4/PARA1).Therefore no SDLT is due and the transaction is not notifiable.