Stamp duty land tax and Land Registry requirements for assignments of leases

Registering an Assignment of a Lease at the Land Registry


Post-completion formalities for assignments

Once an assignment of a lease has been completed, there may be stamp duty land tax if the property is in England (SDLT) or land transaction tax if the property is in Wales (LTT) and Land Registry requirements to comply with.

Stamp duty land tax (SDLT)

SDLT is a tax on land transactions in England, including the assignment of leases. It is a self-assessment tax. The assignee must submit a Land Transaction Return and payment (if any tax is due) to HM Revenue & Customs (HMRC) within 30 days of the “effective date” of the transaction. The time limit is being reduced from 30 days to 14 days for those transactions with an ‘effective date’ on or after 01 March 2019. Usually, but not always, the effective date is the date of completion of the assignment.

The HMRC website has guidance on SDLT liability for leasehold transactions and a useful SDLT calculator. See http://www.hmrc.gov.uk/sdlt/calculate/leasehold.htm .

Currently a Land Transaction Return is only required where a premium of £40,000 or more is paid for the assignment and SDLT is only payable if the premium exceeds £150,000.

Land Transaction Tax (LTT) in Wales

LTT is a tax on land transactions in Wales, including the grant (and assignment) of leases. It is a self-assessment tax. The tenant must submit a Land Transaction Tax return and payment (if any tax is due) to the Welsh Revenue Authority (WRA) within 30 days of the “effective date” of the transaction. Usually, but not always the effective date is the date of completion of the lease. Currently a Land Transaction Tax return is only required where a premium of £40,000 or more is paid for the assignment and LTT is only payable if the premium exceeds £150,000.

For further guidance please see the WRA website . Please also see the LTT calculator .

Both the SDLT and LTT rules are complex, with many exceptions, exemptions and reliefs. Whilst LTT is broadly the same as SDLT, there are some key differences.

If your transaction is not straightforward you should take specialist tax advice to ensure that you pay the correct amount of SDLT or LTT (whichever applies).

Registration of leases at the Land Registry

An assignment of a registered lease must be registered at the Land Registry. So must an assignment of a lease that is not registered but whose term has more than 7 years left to run. If the assignment is not registered, it will not take effect as a “legal” assignment but only as an “equitable” assignment. This is less secure for the assignee and will make future dealings with the lease more complicated for all concerned.

An application to register an assignment of a registered lease is made on Land Registry form AP1. The transfer, a certified copy, and a fee must be submitted, together with evidence that any SDLT or LTT requirements have been met.

An application to register an assignment of a lease that is not registered but whose term has more than 7 years left to run is made on Land Registry form FR1. The transfer and the lease, plus certified copies of each, and a fee must be submitted, together with evidence that any SDLT or LTT requirements have been met and evidence of the landlord’s freehold title.

Further information about registering assignments can be found in Land Registry Practice Guide 25: https://www.gov.uk/government/publications/leases-when-to-register .

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