Tenancy at will: why it is outside stamp duty
Tenancy at will and SDLT
A tenancy at will is a flexible, short-term arrangement that either side can end at any time. It counts as a lease under SDLT legislation, but is expressly exempt from SDLT.
- It may be written or informal.
- The owner must consent to occupation.
- The real terms of the arrangement matter.
Scroll down for the full analysis.
Read the original guidance here:
Tenancy at will: why it is outside stamp duty
A genuine tenancy at will is outside stamp duty land tax, usually called SDLT. It can still count as a lease for some SDLT purposes. That sounds contradictory, but the law makes it exempt.
What this rule is about
A tenancy at will often arises while people consider what longer arrangement, if any, they want, and gives the occupier a short, flexible right to use land. It gives no lasting right.
The key feature is that either side can end it at any time. It is not a fixed-term lease that gives the occupier a lasting right.
What the official source says
HMRC’s manual says that parties may record a tenancy at will in writing or agree it informally, provided the occupier is there as a tenant with the owner’s consent and either side can end the arrangement at any time. Those conditions matter.
- The occupier uses the land as a tenant, not as an employee or agent.
- The owner has agreed to that occupation.
- Either the owner or occupier can end it at any time.
- A written document is not needed.
- HMRC says it ends automatically if either side dies.
- HMRC also says it ends if the owner sells the land.
What this means in practice
The legislation calls a tenancy at will a lease. Yet it also expressly treats it as an exempt interest. SDLT applies to buying a chargeable interest in land, so this exemption means the tenancy at will itself sits outside the SDLT system.
That distinction is the whole point. Calling an arrangement a lease does not, by itself, mean SDLT follows.
- Do not assume that every lease arrangement creates an SDLT charge.
- Check whether the arrangement really can end at either side’s choice.
- Keep the tenancy at will separate from any later formal lease.
How to analyse it
Start with what the parties actually agreed and did. A label in an email or agreement may help, but the practical terms matter.
- Who gave permission for the occupation?
- Was the occupier there as a tenant rather than in another role?
- Could either side end the arrangement immediately?
- Was there any fixed end date or lasting right to stay?
- Did the parties later enter into a different lease?
Example
The owner lets Nadia use an empty shop while they discuss a longer lease, and they agree that either can stop the arrangement at any time, but the owner sells the shop before they sign a formal lease. HMRC’s features are present.
The tenancy at will itself is exempt from SDLT.
Why this can be difficult in practice
The facts are often the hard part, because an arrangement that parties call a tenancy at will may, in its real terms, suggest something more lasting. Labels are not decisive.
HMRC’s manual is its view of the position, not law that binds a court.
- A fixed term can point away from a tenancy at will.
- A right that cannot be ended at any time needs close checking.
- A later formal lease is a separate arrangement and may have different SDLT consequences.
Key takeaways
- A tenancy at will is expressly exempt from SDLT.
- It can be a lease and still be exempt.
- The facts must show that either side could end it at any time.
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 43 — land transactions require a chargeable interest
- FA 2003 section 48 — meaning of a chargeable interest; tenancies at will are exempt interests
- FA 2003 Schedule 17A para 1 — tenancy at will counts as a lease
- FA 2003 Schedule 17A para 4 — tenancy at will is an indefinite lease
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 a real arrangement is a tenancy at will depends on its terms and how the parties act in practice.
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.
- Any written agreement, emails or letters explaining the right to occupy
- Evidence that either side could end the arrangement at any time
- Evidence of the owner’s consent to occupation
- Details of any sale of the land or death of either party
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 Tenancy at will: why it is outside 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 section 43 - land transactions require a chargeable interest https://www.legislation.gov.uk/ukpga/2003/14/section/43/2025-11-17 - FA 2003 section 48 - meaning of a chargeable interest https://www.legislation.gov.uk/ukpga/2003/14/section/48/2025-11-17 - FA 2003 section 48 - tenancies at will are exempt interests https://www.legislation.gov.uk/ukpga/2003/14/section/48/2025-11-17 - FA 2003 Schedule 17A para 1 - tenancy at will counts as a lease https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/1/2025-11-17 - FA 2003 Schedule 17A para 4 - tenancy at will is an indefinite lease https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/4/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm10050 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 a real arrangement is a tenancy at will depends on its terms and how the parties act in practice. 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 1 September 2026
Useful article? You may find it helpful to read the original guidance here: Tenancy at will: why it is outside stamp duty
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