Jurisdiction(s):
United Kingdom

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Key definition

Peppercorn Rent definition

What does Peppercorn Rent mean? In practice, a peppercorn rent is a purely nominal sum (for example, one peppercorn, a red rose or £1 per annum, often “if demanded”) stated in a lease to show that no real economic rent is intended. It is a descriptive expression rather than a defined term, though in England and Wales the Leasehold Reform (Ground Rent) Act 2022 requires most new long residential leases to reserve a ground rent of a peppercorn. Key features and uses: it is commonly used where the tenant pays a premium or the parties want a rent‑free arrangement while preserving a lease (tenancy) conferring...

SDLT: Mixed‑use freehold (leased shop + flat) — 3% surcharge avoided?

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Q&As

Mary Ashley of 15 Old Square

Higher SDLT rates apply where an individual buys a major interest in a single dwelling if conditions A–D are met at day‑end:

A — consideration of £40,000 or more
B — not subject to a lease with over 21 years unexpired
C — purchaser owns another £40,000+ dwelling not so leased
D — does not replace the only or main residence

Dwelling includes a building or part used, suitable or being built/adapted as one dwelling, its gardens, grounds and benefiting land, and off‑plan contracts. Mixed‑use is excluded; no apportionment. As this freehold includes residential and non‑residential parts, it is mixed‑use, so the 3% surcharge should not arise.

Sean Randall of Blick Rothenberg Limited

The 3% applies to “higher rates transactions” in FA 2003, Sch 4ZA, paras 3–7, each requiring the main subject‑matter to consist of a major interest in at least one dwelling. The chargeable interest includes the first‑floor flat but does not consist of it; it includes the ground‑floor shop. “Consists of” is an exclusive test, and HMRC agrees: higher rates do not apply to non‑residential or mixed‑use. For further information, see Practice Note: Higher rates of SDLT on additional residential properties...

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Sean Randall

Blick Rothenberg

Sean is a partner at Blick Rothenberg. For five years, he was head of stamp taxes at KPMG UK, finalist in the 2016 Taxation Awards for Best Big Four Tax Group. He has almost 20 years' experience advising, amongst others, developers, investors, occupiers, funds and banks on stamp taxes in connection with real estate transactions, group reorganisations, corporate reconstructions, demergers and placings. He is a barrister by training, a Fellow of the Chartered Institute of Taxation and council member of the Stamp Taxes Practitioners Group. Since 2007 he has been the editor of Sergeant & Sims on Stamp Taxes arguably the most comprehensive, up-to-date and authoritative guide to UK stamp taxes available. He was the Tax Writer of the Year in the 2017 Taxation Awards having ''demonstrated real in-depth expertise in analysing complex legislation'. He has contributed to the...

Mary Ashley

Old Square Tax Chambers

I have extensive experience advising in all areas of personal taxation. I have recently advised on SDLT, inheritance tax, capital gains tax, domicile, de-enveloping, the variation of trusts and off-shore trusts. I am the co-author of the 11th edition of Taxation of Charities and Non-Profit Organisations....

Web page updated on 27/05/2026

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