Continuation of Lease: Notification and Detailed Information

SDLT and a Lease Continuing Beyond Its Original Term

If a lease carries on after its original fixed term, the SDLT position may need to be reviewed. This is because SDLT on leases depends on matters such as the lease term and the rent payable, so a continuation can sometimes mean HMRC needs a further return or notification.

• SDLT on a lease is not always settled once and for all when the lease is first granted.
• If the lease continues beyond the original term, the tax calculation may change because the term or chargeable consideration may be different.
• The key issue is the legal reason for the continuation, such as holding over, statute, the lease terms, or a further agreement.
• You need to decide whether the same lease is continuing or whether the SDLT rules treat the arrangement as a new or deemed new lease.
• A tenant simply staying in occupation is not enough on its own; the legal basis and any rent changes must be checked carefully.
• In practice, parties should consider whether the continuation creates further SDLT consequences and whether HMRC must be notified again.

Scroll down for the full analysis.

SDLT and the continuation of a lease: when a further return may be needed

This page explains a narrow but important SDLT point: what happens when a lease continues beyond its original fixed term. In some cases, the continuation of a lease can affect SDLT reporting and may require a further notification to HMRC. The source material is brief, so the key is to understand the practical issue it points to.

What this rule is about

SDLT on leases is not always a one-off question answered only at the grant of the lease. A lease can change over time. One example is where a lease does not simply end on the date originally expected, but continues instead.

The legal significance of that continuation is that SDLT may need to be reconsidered. That is because SDLT on leases depends in part on the term of the lease and the rent payable over that term. If the lease carries on, the tax position may no longer be exactly the same as it was when the original return was filed.

What the official source says

The source page indicates that this part of the SDLT manual deals with notification in relation to the continuation of a lease, and points to the next section on that topic. In substance, the issue is whether the continuation of a lease gives rise to an SDLT consequence that needs to be notified.

Although the excerpt itself contains almost no detail, its place in the manual shows that HMRC treats the continuation of a lease as a specific reporting topic rather than merely an incidental change.

What this means in practice

If a lease continues after the period originally contemplated, you should not assume that the SDLT position remains closed forever just because a return was submitted when the lease was first granted.

The practical question is whether the continuation changes the lease term or the chargeable consideration in a way that triggers further SDLT consequences under the lease rules. If it does, there may be a need to notify HMRC again.

This matters most for leases where SDLT was calculated by reference to the expected duration of the lease and the rent over that period. A continuation can alter that calculation.

How to analyse it

A sensible way to approach the issue is to ask the following questions:

• What was the original legal term of the lease?
• Has the lease in fact continued beyond that term?
• Why has it continued: for example, by holding over, by operation of the lease terms, or by some further agreement?
• Does the continuation amount to the same lease carrying on, or does it involve a new lease or deemed new lease under the SDLT rules?
• Has the rent continued at the same level, changed, or become uncertain?
• Does the continuation affect the amount of chargeable consideration that should be taken into account?
• Is there a specific SDLT requirement to file a further return because of the continuation?

These questions matter because SDLT treatment can depend heavily on the legal mechanism by which occupation continues. A simple factual statement that “the tenant stayed on” is not enough. You need to identify the legal basis for that continued occupation.

Example

Illustration: a tenant takes a lease for a fixed term and an SDLT return is filed on the basis of that term and the rent then expected. When the fixed term ends, the tenant remains in occupation and the lease continues rather than ending cleanly. At that point, the parties should consider whether the continuation changes the SDLT analysis and whether HMRC must be notified again.

The answer will depend on the legal nature of the continuation and the lease rules that apply to it. The key point is that continuation is not something to ignore for SDLT purposes.

Why this can be difficult in practice

This area can be fact-sensitive because “continuation” can cover different legal situations. In property practice, a lease may continue because of statute, because of the lease wording, because the tenant holds over, or because the parties have effectively moved into a new arrangement. Those situations may not all be treated the same way for SDLT.

Another difficulty is that the source material here is only a signpost. It identifies the topic but does not itself set out the operative rule. So the practical analysis depends on the wider SDLT lease provisions and the more detailed HMRC material that follows.

Key takeaways

• A lease continuing beyond its original term can have SDLT reporting consequences.
• The important issue is the legal nature of the continuation, not just the fact that the tenant remained in occupation.
• Where a lease continues, check whether the SDLT position needs to be recalculated or notified again.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Continuation of Lease: Notification and Detailed Information

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