Lease promises that do not add to your SDLT bill
Lease duties and SDLT
Usual repair, service, maintenance and insurance duties in a new lease may not add to the amount used for SDLT.
- Separate rent from normal running costs.
- Check unusual promises against market rent.
- Do not rely on HMRC’s transfer statement without checking the law.
Scroll down for the full analysis.
Read the original guidance here:
Lease promises that do not add to your SDLT bill
Some promises in a lease do not add to the amount used for stamp duty land tax, or SDLT. This matters because a lease can require more than rent. You may also agree to repair the property, insure it or pay service charges.
What this rule is about
When you take a lease, SDLT considers everything you give in return, including payments and obligations that arise alongside rent under its terms as well. Rent is the obvious payment. Yet a lease often puts other costs and duties on you too.
Parliament excludes several usual tenant duties. In simple terms, these are ordinary parts of occupying the property that a tenant would undertake anyway, not an additional price paid to obtain the lease. They are routine.
What the official source says
HMRC’s manual says that the following promises do not add to the SDLT amount when a lease is granted. It also says that paying money to meet one of these promises does not change that result.
- A promise to repair, maintain or insure the leased property.
- A promise to pay for services, repairs, maintenance or insurance.
- A promise to pay the landlord’s management costs.
- Another promise that would not change the rent a tenant would pay on the open market.
- A guarantee that the rent, or another tenant promise, will be met.
- A penalty rent, or a higher rent that operates as a penalty after the tenant breaches a lease term, rather than as ordinary rent.
The legislation supports these main exclusions. It also says that a payment made to meet an excluded promise does not count.
There is one point to handle with care. HMRC’s page says the same approach applies where a lease is transferred by the landlord or tenant. The current statutory text instead expressly covers release from an excluded promise when a lease is surrendered. HMRC guidance is not the law.
What this means in practice
Do not include every cost mentioned in the lease in the SDLT calculation, because the lease may describe ordinary running costs alongside consideration for the lease. First separate the rent and any price paid for the lease from ordinary running costs and duties.
That distinction can be valuable. A large service-charge budget can appear to be additional payment for the lease when viewed in isolation, although SDLT does not automatically treat it that way. Context matters.
- Keep the rent separate from service charges.
- List repair and insurance promises in the lease.
- Check whether a payment meets one of those promises.
- Do not assume a lease transfer has the same answer as a surrender.
How to analyse it
Start with the documents, not the label given to a payment. What are you actually agreeing to do, and why?
- Read the lease, schedules and any side agreement.
- Identify each payment and each promise by the tenant.
- Ask whether it is for repair, maintenance, insurance, services or management.
- For an unusual promise, ask whether it would change market rent.
- Check whether the event is a new lease, a transfer or a surrender.
- Use the law in force on the transaction date.
Example
Amir takes a shop lease. It requires annual rent of £24,000, a £3,000 service charge and payment for building insurance. He must also keep the shop in repair. The service, insurance and repair duties are the sort of items listed in the exclusion. They should not simply be added to the rent as extra payment for SDLT.
Now change one fact. Amir also agrees to make an unusual payment, one that would cause a normal tenant to accept lower rent than that tenant otherwise would. That payment may not fit the open-market-rent exclusion. Its effect needs closer review.
Why this can be difficult in practice
The hard cases are not usually repair bills or standard insurance. They are unusual promises hidden in side letters, fit-out terms or payment clauses.
What decides the issue? Whether the promise changes what a tenant would pay in an open market. Calling it a service charge will not settle that question.
- A payment’s name may not match what it really pays for.
- A guarantee is not the same as an extra price for the lease.
- A higher rent after a breach may be a penalty rather than ordinary rent.
- The legal effect of an assignment and a surrender should not be confused.
Key takeaways
- Normal repair, service and insurance duties can be left out.
- Payments made to meet those duties can also be left out.
- Unusual promises need an open-market rent check.
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 50 — points to rules on amounts given for land
- FA 2003 Schedule 17A para 10 — lease promises that do not count towards SDLT; payments made to meet excluded lease promises; release of excluded promises on lease surrender
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
- The facts needed to decide whether a promise affects open-market rent can be difficult to judge.
- The supplied HMRC page says that assumption or release on a transfer by either landlord or tenant is excluded. The current statutory text expressly covers release on surrender, so the position on a transfer should be checked against the law in force on the relevant date.
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 lease and any side letters
- A breakdown of rent, service charges and other payments
- Details of the tenant’s repair, insurance and management duties
- Evidence about whether an unusual promise affects market rent
- The date and type of any later lease transfer or surrender
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 Lease promises that do not add to your SDLT bill [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 50 - points to rules on amounts given for land https://www.legislation.gov.uk/ukpga/2003/14/section/50/2025-11-17 - FA 2003 Schedule 17A para 10 - lease promises that do not count towards SDLT https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/10/2025-11-17 - FA 2003 Schedule 17A para 10 - payments made to meet excluded lease promises https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/10/2025-11-17 - FA 2003 Schedule 17A para 10 - release of excluded promises on lease surrender https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/10/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm04090 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 - The facts needed to decide whether a promise affects open-market rent can be difficult to judge. - The supplied HMRC page says that assumption or release on a transfer by either landlord or tenant is excluded. The current statutory text expressly covers release on surrender, so the position on a transfer should be checked against the law in force on the relevant date. 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: Lease promises that do not add to your SDLT bill
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