Stamp duty and agreements for lease: when SDLT can start early
Agreements for lease and SDLT
An agreement for lease normally does not trigger SDLT when signed. However, if it is substantially performed before the formal lease is granted, it can be treated as a notional lease from that earlier date.
- Early possession can be decisive.
- The first rent payment can also matter.
- Records of occupation and payments are vital.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty and agreements for lease: when SDLT can start early
Stamp duty and agreements for lease: when SDLT can start early
Signing an agreement for lease does not normally trigger stamp duty land tax, known as SDLT.
However, early action can start SDLT. Ask whether anyone acted on the agreement before the landlord granted the formal lease. If so, SDLT can start from that earlier point.
What this rule is about
The parties use an agreement for lease to promise that they will grant a lease later. They may use it while they build, fit out or prepare a property for use.
You might assume that signing the formal lease always decides SDLT. That is not the case. Early occupation or payment can matter more.
What the official source says
HMRC’s manual explains that signing the agreement alone does not create a land transaction for SDLT. The legislation treats the agreement as a contract rather than a completed land transaction. That is the starting point.
If the parties have not substantially performed the agreement before the landlord grants the lease, HMRC deals with the agreement and lease together for SDLT purposes. HMRC then uses the date the lease is granted as the SDLT date.
- Signing the agreement alone does not create an SDLT transaction.
- Early action makes the agreement a notional lease for SDLT.
- The SDLT date for that notional lease is the date of substantial performance.
- Generally, SDLT ignores the later formal lease as a separate event.
What this means in practice
Substantial performance signals that the arrangement is no longer just a promise on paper, because the parties have begun putting it into effect. It can arise when the buyer, or someone connected with them, takes possession of all or almost all of the property.
Payment can also cause substantial performance. Where rent is the only amount due, the first rent payment is enough.
Where a non-rent amount, such as a premium, is due, the tenant must pay all or almost all of it before that payment amounts to substantial performance. That threshold matters.
- Check when access and occupation actually began.
- Keep records of the first rent payment and any premium.
- Do not assume a temporary licence avoids the issue.
- Check whether anyone connected with the tenant took possession.
How to analyse it
Begin with the dates, rather than the document label. A label such as licence, or a statement that the parties had not yet signed the lease, may not settle the SDLT position.
Occupation or payment may point the other way. Facts matter more.
- Is there an agreement under which a lease was to be granted?
- When was the actual lease granted?
- Before then, did the tenant take possession of all or almost all of the property?
- Before then, was rent first paid or was nearly all another amount paid?
- If so, what was the date of that event?
Example
A business signs an agreement for a shop lease. Before the landlord grants a formal lease, the business moves into the whole shop, begins trading, and operates there as its premises on a daily basis.
SDLT may treat it as a notional lease from move-in. The later formal lease does not simply move the SDLT date forward.
Why this can be difficult in practice
This is the point people often miss: the key event may be practical use of the property rather than a signature. Small documentary details and events on site can determine the answer.
- Possession includes a right to receive rents or profits from the property.
- Occupation under a temporary arrangement may still count as possession.
- There is no fixed percentage for “substantially the whole” of a non-rent payment.
- Partial access for works may need careful review against the agreement’s terms.
Key takeaways
- Signing an agreement for lease does not itself trigger SDLT.
- Early possession or payment can bring the SDLT date forward.
- Check the agreement, occupation and payment dates together.
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 44 — signing a contract is not itself a land transaction; completed contracts form one transaction with the conveyance; when a contract has been substantially performed
- FA 2003 Schedule 17A para 12A — agreements for lease treated as notional leases
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 possession covers all or substantially all of what the agreement covers can depend on the facts.
- The legislation does not give a fixed percentage for when non-rent payments are substantially the whole amount.
- The dates and terms of the agreement, occupation and actual lease must be checked carefully.
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 for lease and any variations
- The date the actual lease was granted
- Evidence of when the tenant or a connected person took possession
- Rent demands, payment records and proof of any premium or other payment
- Documents showing rights to receive rents or profits before the lease
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 Stamp duty and agreements for lease: when SDLT can start early [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 44 - signing a contract is not itself a land transaction https://www.legislation.gov.uk/ukpga/2003/14/section/44/2025-11-17 - FA 2003 section 44 - completed contracts form one transaction with the conveyance https://www.legislation.gov.uk/ukpga/2003/14/section/44/2025-11-17 - FA 2003 section 44 - when a contract has been substantially performed https://www.legislation.gov.uk/ukpga/2003/14/section/44/2025-11-17 - FA 2003 Schedule 17A para 12A - agreements for lease treated as notional leases https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/12A/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/sdltm10040 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 possession covers all or substantially all of what the agreement covers can depend on the facts. - The legislation does not give a fixed percentage for when non-rent payments are substantially the whole amount. - The dates and terms of the agreement, occupation and actual lease must be checked carefully. 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: Stamp duty and agreements for lease: when SDLT can start early
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