Reverse premiums on leases and stamp duty
Reverse premiums and SDLT
A reverse premium is a lease payment made in the opposite direction from the usual one. It does not count when working out SDLT.
- Landlord to tenant on a new lease
- Outgoing tenant to incoming tenant on a transfer
- Tenant to landlord on a surrender
Scroll down for the full analysis.
Read the original guidance here:
Reverse premiums on leases and stamp duty
When a landlord pays you a lump sum for taking a lease, the payment does not count for stamp duty land tax. The same result can apply if a lease is transferred or ended. The money’s direction matters.
What this rule is about
A premium is generally a one-off payment connected with a lease. A reverse premium follows the opposite of the usual pattern: it is paid to the person taking, receiving or giving up the lease.
This distinction can change the SDLT figure. It is not merely a question of money changing hands.
What the official source says
HMRC’s manual, which reflects Finance Act 2003 Schedule 17A, states that a reverse premium is not chargeable consideration, the term for an amount counted for SDLT. That exclusion matters.
- On a new lease, the landlord pays the tenant.
- On a lease transfer, the outgoing tenant pays the incoming tenant.
- When a lease ends by surrender, the tenant pays the landlord.
What this means in practice
Do not add a qualifying reverse premium to the SDLT amount for that lease event. Other payments may still be relevant.
- Separate the reverse premium from rent.
- List any payment made in the other direction.
- Check whether the documents describe several different sums.
How to analyse it
Begin with the lease event and then trace the money. Labels may assist, but the actual payment route is what matters.
- Is this a new lease, a transfer or a surrender?
- Who made the one-off payment?
- Who received it?
- Does that direction match the statutory definition?
Example
Priya takes a new shop lease. Because the premises need work before trading can begin, the landlord pays her £20,000. That £20,000 moves from landlord to tenant, so it is a reverse premium. It does not count for SDLT on the lease grant.
Why this can be difficult in practice
Many people assume that every payment in a lease deal increases SDLT. That is wrong. A payment may instead be described as an incentive, contribution or compensation, which means the paperwork and facts require checking.
- A payment with more than one purpose may need closer review.
- Rent and other lease payments are separate questions.
- The name given to a payment may not settle its treatment.
Key takeaways
- A reverse premium is excluded from SDLT.
- The payment direction decides whether it qualifies.
- Check every other payment separately.
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 Schedule 17A para 18 — reverse premiums excluded from lease transaction consideration
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 source does not explain how to treat a payment that has mixed purposes or is labelled differently in the lease documents.
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 lease, assignment or surrender document
- Evidence of who paid the premium and who received it
- A breakdown of any other sums paid under the arrangements
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 Reverse premiums on leases and stamp duty [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 Schedule 17A para 18 - reverse premiums excluded from lease transaction consideration https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/18/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm04110 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 source does not explain how to treat a payment that has mixed purposes or is labelled differently in the lease documents. 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: Reverse premiums on leases and stamp duty
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