Guidance on Lease Continuation and Stamp Duty Land Tax Notification Requirements

SDLT when a lease continues after its fixed term

If a lease carries on after its original fixed term ends, SDLT may need to be reviewed even if no new lease is signed. HMRC treats the lease as if it had been granted for an extra year at a time, which can create a further filing duty, extra tax to pay, or a first SDLT return if the lease was not originally notifiable.

• When a lease continues after expiry, whether under its terms or by law, HMRC treats it as one year longer than first notified, then two years longer if it continues again, and so on.
• This longer deemed term can change the SDLT calculation because lease tax depends partly on the length of the term.
• If the original lease was already notified, HMRC says a further return is made by letter to the Stamp Office, including the original UTRN, the revised calculation, and any extra tax due.
• Where extra tax arises on a lease already notified, payment is due within 30 days of the end of the term already notified.
• If the lease was not originally notifiable but becomes notifiable because it continues, an SDLT1 must be filed and payment made; HMRC says penalties will not be charged if this is done within 14 days of the continuation that triggered notification.
• In practice, the key checks are whether the lease has continued, what was originally filed and paid, and whether the new deemed term now increases the tax or creates a notification duty.

Scroll down for the full analysis.

SDLT on a lease that carries on after its fixed term

This page explains what happens for SDLT if a lease does not end when its original fixed term ends, but instead continues. That can happen because the lease itself allows it, or because the law treats the tenant as remaining in occupation on a continuing basis. The SDLT position can change when that happens, and in some cases a further return or extra tax is due.

What this rule is about

When a lease is first granted, SDLT is worked out by reference to the term granted at that point. But some leases continue after the original fixed term. For SDLT purposes, that continuation is not ignored.

The rule in HMRC’s material is that a lease which continues after its fixed term is treated as if it had been granted for a longer fixed period. First, it is treated as one year longer than the original term. If it continues beyond that, it is treated as two years longer, and so on.

This matters because the tax calculation on a lease depends in part on the length of the term. If the deemed term increases, the SDLT calculation may need to be redone. That may trigger a further filing obligation and, in some cases, more tax.

What the official source says

HMRC’s manual says that the original grant of the fixed-term lease is notified, if notification is required, as a lease for that original term.

If the lease then continues after the end of the fixed term, whether under the lease terms or by operation of law, it is treated as a lease for a fixed period one year longer than the term originally notified. If it continues after that extra year, it is treated as two years longer than the original term, and so on.

HMRC then sets out three procedural situations:

• If the original lease was notified on an SDLT1 but no tax was due, and the lease later continues, a further return is required in the form of a letter to the Stamp Office. The tax must be recalculated on the basis of a lease one year longer than originally notified. The letter should include the UTRN of the original return, details of the new tax calculation, and the self-assessed tax now due. Any tax due must be paid within 30 days of the end of the term already notified.
• If the original lease was notified and tax was paid, and the lease later continues, a further letter is again required. The recalculation is made on the basis of a lease one year longer than originally notified. The letter should include the UTRN, details of the new tax calculation, and the self-assessed tax now due. Any additional tax, being the recalculated amount less the tax already paid, must be paid within 30 days of the end of the term already notified.
• If the original lease was not notifiable, for example because it was below the notification threshold, but the continuation means it now becomes notifiable, an SDLT1 and payment are required. HMRC says the effective date is the date of the original transaction. Penalties will not be charged if the return is made within 14 days of the continuation that creates the obligation to notify. After the return is submitted, a letter should also be sent to the Stamp Office with the UTRN, details of the tax calculation, and the self-assessed tax now due.

What this means in practice

The key practical point is that SDLT on a lease may need revisiting when the fixed term ends.

A common misunderstanding is to assume that once the original lease return has been filed, nothing more needs to be done unless a formal new lease is granted. HMRC’s guidance shows that this is not always right. A continuation after the fixed term can itself change the SDLT position.

In practice, you need to ask:

• Did the lease continue after the original fixed term ended?
• Was the original lease already notified?
• Was any tax paid on the original filing?
• Does the longer deemed term now increase the tax or make the lease notifiable when it was not before?
• Has the relevant deadline started to run?

If the lease continues, the tax is not recalculated on an open-ended basis. Instead, HMRC’s approach is step-by-step. First assume the lease was one year longer than originally notified. If it continues again, then assume it was two years longer, and so on.

The filing method also matters. HMRC’s manual refers to a further return being made by letter to the Stamp Office in the cases where the original lease had already been notified. Where the lease had not originally been notifiable but becomes notifiable because of the continuation, HMRC says an SDLT1 must be filed, and then a letter sent with the relevant details.

How to analyse it

A sensible way to approach this is as follows.

1. Identify the original fixed term that was granted and the SDLT position at that time.
2. Check whether the tenant remained in occupation after the fixed term ended, and whether the lease therefore continued either under its own terms or by operation of law.
3. Work out the first period already notified for SDLT purposes.
4. At the end of that notified term, if the lease has continued, recalculate SDLT on the basis that the lease term was one year longer than originally treated.
5. Compare the recalculated liability with what has already been filed and paid.
6. If more tax is due, pay the difference within the deadline HMRC gives.
7. If the lease was originally below the notification threshold, check whether the continuation now brings it into the notifiable regime.
8. If the lease continues beyond the first extra year, repeat the exercise on the basis of a term two years longer than the original, and so on.

The deadline is important. HMRC’s manual says that where a further letter is required after continuation of a lease already notified, payment is due within 30 days of the end of the term already notified. Where the lease was not originally notifiable but becomes notifiable because of continuation, HMRC says the SDLT1 must be filed within 14 days of the continuation that makes it notifiable, and penalties will not be charged if that is done.

Example

This is an illustration of the HMRC procedure.

A tenant is granted a fixed-term lease. At the start, an SDLT return is filed based on that fixed term. No tax is due. When the fixed term ends, the tenant remains in occupation and the lease continues.

Under HMRC’s approach, the lease is now treated as if it had been granted for one year longer than the original fixed term. SDLT must be recalculated on that basis. If that revised calculation now produces tax, a letter must be sent to the Stamp Office giving the original UTRN, the new calculation, and the self-assessed tax due. The tax must be paid within 30 days of the end of the term that had originally been notified.

If the tenant remains in occupation beyond that extra year as well, the exercise is repeated on the basis that the lease is treated as two years longer than the original term.

Why this can be difficult in practice

The main difficulty is that the SDLT consequences arise from continuation itself, not only from a newly signed lease. That can easily be missed if no one reviews the position when the fixed term expires.

Another difficulty is timing. The relevant deadline runs by reference to the end of the term already notified, or in some cases from the continuation that first makes the lease notifiable. If the parties only realise much later that the lease has rolled on, the filing position may already need attention.

There can also be uncertainty in working out exactly when a lease has continued and on what basis. HMRC’s manual covers continuation provided for in the lease and continuation by operation of law, but the underlying facts still matter. The legal status of the tenant’s occupation after expiry may need to be checked carefully.

A further point is that HMRC’s manual is procedural guidance. It explains how HMRC expects the return and payment process to work. It should be read alongside the legislation it cites, rather than treated as replacing it.

Key takeaways

• A lease that continues after its fixed term can change the SDLT position even if no new lease is signed.
• HMRC treats the continuing lease as one year longer than the original term, then two years longer, and so on if it keeps continuing.
• That can trigger a further filing obligation, extra tax, or a first SDLT return where the original lease was below the notification threshold.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guidance on Lease Continuation and Stamp Duty Land Tax Notification Requirements

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