In brief...: Tenants tax rise warning

Sep 5 2008

Commercial tenants are being warned they face heavy tax bills when Stamp Duty Land Tax legislation is introduced later this year.

From December 1, 2008, tenants who suffered an 'abnormal' rent increase of more than 20 per cent a year since the date their lease was last set will be subject to increased taxes.

The new charges are applicable to tenants whose lease was granted on or after December 1, 2003.

Alan Cook, a partner in McGrigors' real estate team, said: "This rule was designed to catch those who have used an artificially low rent in the first five years of the lease for avoidance of tax. But it may also have been to ensure HMRC could not be penalised because initial estimates of rents were unrealistically low."