Exempt land interests: when SDLT does not apply
Exempt interests and SDLT
Finance Act 2003 excludes several land interests from SDLT, including security interests, genuine licences and tenancies at will.
- Check the real rights granted, not only the document title.
- A mortgage exclusion does not exempt the related property purchase.
- Extra rights attached to a manor may need separate review.
Scroll down for the full analysis.
Read the original guidance here:
Exempt land interests: when SDLT does not apply
Some rights connected with land, including a mortgage, a genuine licence to use land, and a tenancy at will, do not trigger stamp duty land tax. Document labels do not decide it.
What this rule is about
SDLT is a tax on certain land transactions in England and Northern Ireland. In simple terms, it applies when someone gets a type of land right that the law covers.
Section 48 of the Finance Act 2003 removes some rights from that group, so a deal involving only one excluded right is not, by itself, a land transaction for SDLT. That is the exclusion.
This can matter when paperwork concerns access, short-term occupation, security for a loan, or old rights linked to land, particularly where the document’s name differs from the right actually granted. Names do not decide it. A document may be described as a licence or a tenancy at will.
What the official source says
HMRC’s manual says that dealings in the following exempt interests are not chargeable to SDLT, reflecting the list in section 48, although the manual is guidance rather than law. The statute controls.
- A security interest, such as a mortgage, held to secure payment or another obligation.
- A licence to use or occupy land.
- A tenancy at will.
- An advowson, meaning a lasting right to put forward a person for a church post.
- A franchise granted by the Crown, such as a right to hold a market or take tolls.
- A manor, also called a Lordship of the Manor or seignory.
The Act excludes a security interest only where it secures money or another obligation. It does not include a rentcharge within that definition.
For a Crown franchise, the Act gives market, fair and toll rights as examples. The key feature is that the Crown made the grant.
What this means in practice
Buying a home and taking out a mortgage are different things. The mortgage security is excluded. The purchase of the home may still be a transaction on which SDLT is due.
Likewise, permission to use land may be excluded if it is truly a licence. But if the arrangement really gives someone a lease, the SDLT position can be very different.
- Do not assume a mortgage means there is no SDLT on the property purchase.
- Read the rights granted, rather than relying on a document title.
- Check whether the occupier has sole control of a defined space.
- Check whether regular rent is paid and how the arrangement operates over time.
- For an old manor title, identify every extra right included with it.
This is the part people can miss: one document can contain both an excluded right and another right that SDLT does cover.
How to analyse it
Start with the real arrangement. Ask what the parties have agreed, what they do in practice, and what rights have changed hands.
- Identify the land or right being transferred, created, changed or given up.
- Read the whole agreement, plans and any linked documents.
- Ask whether the right is one of the interests listed in section 48.
- For a licence, ask whether the occupier instead has rights like those under a lease.
- For a tenancy at will, check whether the facts suggest an ongoing periodic tenancy.
- For a manor, separate the title itself from any rights that come with it.
- Consider each separate right, rather than treating the whole arrangement as one item.
What decides a licence question? Not the word “licence” at the top of the page. HMRC says a document described that way may really be a lease where its practical effect is to give exclusive occupation.
Example
Amira takes a mortgage from a bank to help buy a house. The bank’s mortgage security is an exempt interest, so that security is not itself subject to SDLT. Amira’s purchase of the house is separate. The SDLT position of her house purchase depends on the normal rules for that purchase, not on the exemption that applies to the bank’s mortgage security. They are separate.
Now change the facts. A landowner signs a document called a “licence” for a shop unit, but the occupier has sole use of the unit for an agreed period. HMRC’s manual warns that the arrangement may in fact be a lease. The title on the document does not settle the point.
Why this can be difficult in practice
These exclusions sound simple because their names are familiar. The hard part is often deciding what the arrangement really is. That can depend on the full agreement and on how the parties behave.
- A licence can look like a lease if one person has exclusive occupation.
- A tenancy at will can look like an ongoing tenancy if rent is paid regularly.
- Calling a right a mortgage does not show what every linked document does.
- A manor may include rights over land, such as rights to take something from it, which need separate checking.
HMRC’s manual highlights these risks but does not provide a full test for every situation. The statutory wording remains the starting point.
Key takeaways
- Some land rights are excluded from SDLT by Finance Act 2003 section 48.
- A mortgage security is excluded, but the property purchase remains a separate SDLT question.
- Document labels can mislead, so check the rights that the arrangement really gives.
Technical analysis
For advisers, and for anyone who wants to check the law behind this page. You do not need this section to understand the guidance above.
Legislation
- FA 2003 section 42 — the basic charge to stamp duty land tax
- FA 2003 section 43 — when a land transaction falls within SDLT
- FA 2003 section 48 — land rights that SDLT can cover; land interests excluded from SDLT; meaning of security interest and franchise
Official guidance
The pages below are HMRC’s guidance. Guidance is not law. It sets out how HMRC reads the legislation, and it is not binding on you, on a tribunal or on a court. Where guidance and the legislation differ, the legislation wins. HMRC can also change or withdraw guidance, and it may not cover your facts.
Where this is not settled
- Whether an arrangement is a licence, lease, tenancy at will or periodic tenancy depends on its real terms and how it works in practice.
- Where a manor includes further rights, the documents must show exactly what is being transferred.
- HMRC’s manual is guidance, not law. The statutory wording takes priority if there is a conflict.
Evidence you would need
This kind of case is decided on the facts of the individual property. These are the records that usually settle it, and the ones an adviser would ask you for.
- The signed agreement and any related property documents.
- Details of who can occupy the land and on what terms.
- Evidence of rent, payment arrangements and how long occupation lasts.
- For a manor, a list of every right included in the transfer.
Explore this with an AI
Readers often want to test their own situation. Copy the prompt below into ChatGPT, Claude or Gemini. It hands the model the actual legislation for this page rather than letting it answer from memory, and tells it to be explicit about what is uncertain. What comes back is information, not advice – check it against the links above.
I am researching UK Stamp Duty Land Tax (SDLT), which applies in England and Northern Ireland. MY QUESTION Exempt land interests: when SDLT does not apply [Replace this with your own situation: what you are buying, the price, the dates, who the buyer is, and what you plan to do with the property.] THE LAW THIS TURNS ON - FA 2003 section 42 - the basic charge to stamp duty land tax https://www.legislation.gov.uk/ukpga/2003/14/section/42/2025-11-17 - FA 2003 section 43 - when a land transaction falls within SDLT https://www.legislation.gov.uk/ukpga/2003/14/section/43/2025-11-17 - FA 2003 section 48 - land rights that SDLT can cover https://www.legislation.gov.uk/ukpga/2003/14/section/48/2025-11-17 - FA 2003 section 48 - land interests excluded from SDLT https://www.legislation.gov.uk/ukpga/2003/14/section/48/2025-11-17 - FA 2003 section 48 - meaning of security interest and franchise https://www.legislation.gov.uk/ukpga/2003/14/section/48/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm00320 HOW I WANT YOU TO ANSWER 1. Work from the legislation above. Read it before answering. Guidance from HMRC is its view of the law, not the law, and does not bind a tribunal or a court. 2. Tell me what the rule actually requires, in plain English. 3. Tell me which facts decide the answer, and which facts would change it. 4. Tell me what evidence I would need to support the position. 5. Be explicit about anything unsettled or fact-sensitive. Do not guess. 6. Your training data has a cutoff and SDLT rates and reliefs change at fiscal events. Say so if you are not sure the law is current. POINTS ALREADY KNOWN TO BE UNCERTAIN ON THIS TOPIC - Whether an arrangement is a licence, lease, tenancy at will or periodic tenancy depends on its real terms and how it works in practice. - Where a manor includes further rights, the documents must show exactly what is being transferred. - HMRC's manual is guidance, not law. The statutory wording takes priority if there is a conflict. Do not give me a conclusion you cannot support from the provisions above.
Legislation links show Finance Act 2003 as it stood on 2025-11-17. The law may have changed since, and the rules that apply are those in force on the date of your transaction. The official guidance this page is based on is here.
This page was last updated on 31 August 2026
Useful article? You may find it helpful to read the original guidance here: Exempt land interests: when SDLT does not apply
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