Stamp Duty Land Tax: Lease Premium Calculation Example 1 Explained

SDLT on Lease Premiums in the Archived “Relevant Rental Figure” Example

This archived HMRC example explains a narrow SDLT point on lease premiums. For the issue being illustrated, there was no difference between residential and non-residential lease premium payments, but any rent under the lease still had to be considered separately under the lease-rent rules.

• SDLT on a lease can apply to both an upfront premium and the rent payable under the lease.
• In this archived example, HMRC said there was no need to treat residential and non-residential lease premium payments differently.
• The point only relates to the premium element, so it should not automatically be applied to the rent calculation.
• When reviewing a lease transaction, first separate what is premium and what is rent, then check which SDLT rules apply to each part.
• Because the material is archived and brief, it should be used as historical explanation only and checked against current legislation and HMRC guidance.

Scroll down for the full analysis.

SDLT on a lease premium: how the “relevant rental figure” worked in Example 1

This page concerns an older, archived SDLT example about calculating tax on a lease premium. The key point is that, for the purpose covered by this example, there was no distinction between residential and non-residential lease premium payments. That matters because SDLT on leases can involve more than one charging element, and the treatment of a premium has to be identified correctly.

What this rule is about

When a lease is granted, SDLT may be charged on two different things:

• any premium or other charge paid for the grant of the lease, and
• the rent payable under the lease.

The source material is about the premium side of that calculation, and specifically an archived example dealing with the “relevant rental figure”. Although the source text is very brief, its message is that, in that example, there was no reason to treat residential lease premiums differently from non-residential lease premiums.

What the official source says

The archived HMRC page states that there was “no reason to differentiate between residential and non residential lease premium payments”.

In practical terms, that means the example was illustrating a point where the premium paid for the grant of a lease was not split into different rules purely because the property was residential or non-residential. The page is archived, so it should be read as historical explanatory material rather than current stand-alone guidance.

What this means in practice

If you are analysing SDLT on the grant of a lease, you should not assume that every part of the calculation changes simply because the property is residential rather than non-residential. This archived example indicates that, at least for the point being illustrated, the treatment of the lease premium did not depend on that distinction.

That is important because lease transactions are often analysed in stages:

• Is there a premium?
• Is there rent?
• Which charging rules apply to each?
• Do any special rules alter the normal result?

The source suggests that, for this example, the premium element was not one of the areas where a residential/non-residential divide affected the analysis.

How to analyse it

A sensible way to approach this kind of SDLT question is:

• Identify exactly what is being paid. Separate any lease premium from the rent.
• Check whether the issue you are looking at concerns the premium, the rent, or both.
• Do not assume that the property’s residential or non-residential character changes every part of the SDLT calculation.
• Check whether the material you are using is archived or current. Archived examples may still help explain a concept, but they are not a substitute for the legislation and current guidance.
• Read the example in the wider SDLT framework for lease transactions, because lease premiums and rent are charged under related but distinct rules.

Example

Illustration: a tenant takes a new lease and pays an upfront premium as well as ongoing annual rent. If the issue under consideration is the treatment of the premium in the archived example, the source indicates that you would not change that premium analysis simply because the leased property is residential rather than non-residential. You would still need to consider the rent separately under the lease-rent rules.

Why this can be difficult in practice

The difficulty is that the source page is extremely short and archived. It signals a narrow point, but it does not set out the full legislative machinery or the detailed facts of the example. That creates two practical risks:

• treating the statement as if it applies to every SDLT issue on leases, when it may only apply to the premium point being illustrated, and
• relying on archived manual wording without checking the current legislation and current HMRC guidance.

Another source of confusion is that lease transactions often involve both premium and rent, and the rules for those elements are not identical. A statement about the premium should not automatically be carried across to the rent calculation.

Key takeaways

• This archived example says there was no reason to distinguish between residential and non-residential lease premium payments for the point being illustrated.
• In lease SDLT analysis, always separate the premium element from the rent element.
• Because the page is archived and sparse, it should be read alongside the legislation and current SDLT guidance, not in isolation.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Stamp Duty Land Tax: Lease Premium Calculation Example 1 Explained

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