Indefinite Term Leases: SDLT Changes and Scottish Land Transaction Tax

SDLT and leases with no fixed end date

Leases that continue without a clear end date can still fall within SDLT rules. The absence of a fixed term does not mean the arrangement can be ignored for tax purposes, so you need to look at the legal effect of the tenancy, how it continues, and whether SDLT or, in Scotland from April 2015, LBTT applies.

• SDLT on leases depends heavily on the term, so an indefinite or rolling lease must still be analysed.
• The key issue is the legal nature of the arrangement, including whether it is a lease or licence, how rent is paid, and what notice rights exist.
• A lease may continue periodically, by holding over after a fixed term, or under its own terms, and these situations may not be treated the same way.
• The SDLT position can affect whether the transaction is notifiable, how the lease term is identified, and how chargeable consideration is worked out.
• If the arrangement changes over time, such as moving from a fixed term to periodic occupation, each stage may need separate analysis.
• For land transactions in Scotland from April 2015 onwards, SDLT does not apply and LBTT must be considered instead.

Scroll down for the full analysis.

SDLT and indefinite leases that continue without a fixed end date

This page is about how Stamp Duty Land Tax treated leases that did not have a clear fixed term but continued indefinitely. The source material is very brief, but the underlying issue matters because SDLT on leases depends heavily on the length of the term. If a lease can carry on without a defined end point, you need to work out how the tax rules treat that continuing occupation.

What this rule is about

For SDLT, the term of a lease is a central part of the tax analysis. It affects how the lease is characterised and how any tax charge is calculated. Most leases have a stated start date and a stated end date. Some arrangements are less clear. They may continue from period to period, or continue indefinitely unless and until brought to an end.

The source page sits within HMRC material on the term of a lease. Its focus is leases with an indefinite continuing term. That is a technical point, but in practice it matters whenever occupation continues without a conventional fixed expiry date.

The archived notice on the page also matters. It says that from April 2015 SDLT no longer applies to land transactions in Scotland, because those transactions instead fall within Land and Buildings Transaction Tax. So this material is relevant to SDLT historically, and still relevant to SDLT in England and Northern Ireland, but not to post-April 2015 Scottish land transactions.

What the official source says

The official source heading identifies the issue as the “treatment of indefinite term leases continuing”. The page itself is archived and includes the note that SDLT no longer applies to land transactions in Scotland from April 2015.

Although the scraped content does not include the substantive text, the heading makes clear that the topic is how SDLT deals with a lease where the term is indefinite and the lease continues. In SDLT, that is not just a drafting curiosity. The tax rules need a way to treat a lease even where the parties have not set a conventional fixed end date.

What this means in practice

If a lease does not have a straightforward fixed term, you cannot stop at the wording and assume the SDLT analysis is impossible. The tax system still needs to identify what sort of lease exists and how long it is treated as lasting for SDLT purposes.

In practice, the key point is that a continuing lease with no obvious final end date may still be treated as having a term for tax purposes. The legal nature of the tenancy, the way rent is paid, the parties’ rights to terminate, and whether the arrangement rolls on from one period to the next can all matter.

This affects issues such as:

• whether there is a notifiable land transaction at all;
• how the lease term is identified for SDLT purposes;
• how any chargeable consideration is assessed;
• whether later continuation, renewal, or variation changes the SDLT position.

The archive note is also practically important. If the property is in Scotland and the effective date is from April 2015 onwards, you should not use SDLT guidance at all. You need to look at LBTT instead.

How to analyse it

When dealing with an indefinite or continuing lease, a sensible approach is to ask the following questions.

• What is the legal nature of the occupation arrangement? Is it clearly a lease or tenancy, rather than a licence?
• Does the document state a fixed term, or does it continue periodically with no fixed end date?
• What rights do the parties have to terminate? Can either party end it by notice, and if so, on what terms?
• Is the lease continuing by operation of its own terms, by statute, or by holding over after expiry of an earlier term?
• What rent is payable, and at what intervals?
• Is the transaction in England or Northern Ireland for SDLT purposes, or in Scotland where LBTT may apply instead?

These questions matter because SDLT does not look only at labels. A tenancy described informally as “ongoing” or “rolling” still has to be analysed by reference to its legal effect.

Where the arrangement has changed over time, you also need to separate out the stages. For example, there may have been an original fixed-term lease followed by a continuing periodic occupation. The SDLT treatment may depend on whether the later occupation is treated as part of the original lease, a continuation of it, or a new lease.

Example

Illustration: a tenant takes occupation under a lease that does not specify a final expiry date but provides for monthly rent and allows either party to end the arrangement on notice. For SDLT purposes, the parties cannot assume that the absence of a fixed end date means the lease can be ignored. The arrangement still has to be analysed as a lease with a continuing term, and the SDLT treatment will depend on how the legislation applies to that kind of tenancy.

If the same facts arose in Scotland after April 2015, SDLT would not be the correct tax regime. The transaction would need to be considered under LBTT instead.

Why this can be difficult in practice

The difficulty is that “indefinite” can describe several different legal situations. A lease may be periodic from the outset. It may continue after a fixed term expires. It may be terminable on notice. It may continue because the parties simply carry on after the written term ends. Those situations are not always treated identically.

Another difficulty is that HMRC manual headings often assume the reader already knows the legislative framework. A short manual page title does not itself tell you the full legal rule. You need to connect the practical facts with the legislation on lease terms and, where relevant, with the wider SDLT rules on rent, consideration, and later changes to the lease.

The Scotland point also creates a trap. Older SDLT material may still appear in searches, but it does not govern post-April 2015 Scottish transactions.

Key takeaways

• An indefinite or continuing lease still needs to be analysed for SDLT purposes; the lack of a fixed end date does not remove the tax issue.
• The legal effect of the tenancy matters more than informal descriptions such as “rolling” or “ongoing”.
• For Scottish land transactions from April 2015 onwards, SDLT guidance is not the right regime; LBTT applies instead.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Indefinite Term Leases: SDLT Changes and Scottish Land Transaction Tax

View all HMRC SDLT Guidance Pages Here