Stamp duty (SDLT): lease premiums and reverse premiums
Lease payments: the key point
HMRC’s source page is only an index. It directs readers to material on lease premiums and reverse premiums.
- Not every lease payment is rent.
- Who pays whom can change the SDLT treatment.
- Reverse premiums do not count in the SDLT calculation.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty (SDLT): lease premiums and reverse premiums
When a lease includes a lump sum, often called a premium, the amount may affect stamp duty land tax (SDLT), especially where the contract shows money moving in an unusual direction. Direction matters.
What this rule is about
Because HMRC’s page functions as a contents page rather than a full explanation, readers must use it to find separate material on lease premiums and reverse premiums. It is an index.
Usually, a premium is a payment connected with a lease, whereas a reverse premium involves money moving opposite to the direction of the usual lease payment. The flow is reversed.
What the official source says
Two HMRC manual topics are identified on the official page. Rates, calculations, and return steps are not given there.
- One linked section covers premium payments for a lease.
- The other linked section covers reverse premiums.
What this means in practice
Before treating any sum in a lease as rent, identify its purpose and then check, under the contract, who pays whom and in what circumstances. Do not assume.
- Separate regular rent from a lump-sum payment.
- Check whether money moves from landlord to tenant.
- Keep the lease, side letters, and payment records together.
How to analyse it
Rather than relying on the label used in an email, begin with the paperwork and trace the payment through the lease and any related agreement. Names can mislead.
Even a payment called an incentive may still need careful analysis.
- Identify whether the lease is granted, assigned, or surrendered.
- List every payment linked to that event.
- Record the payer, recipient, amount, and reason.
- Check whether the payment is rent, a premium, or a reverse premium.
Example
Alex takes a lease. If Alex pays the landlord a £20,000 lump sum for it, the sum may be a premium and needs separate SDLT analysis. If the landlord pays Alex £20,000 when granting the lease, it is a reverse premium. The legislation says that a reverse premium does not count as chargeable consideration, so it is not an amount used to work out SDLT.
Why this can be difficult in practice
Its name does not settle the issue. Lease incentives, surrender payments, and linked agreements can make the real arrangement less obvious.
- A rent-free period is not automatically a reverse premium.
- A payment may appear only in a side agreement.
- The timing and purpose of the payment can matter.
Key takeaways
- HMRC’s page is an index to two lease-payment topics.
- Check the direction and purpose of every payment.
- A reverse premium is excluded from the SDLT calculation.
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 — directs how payments for land transactions are treated
- FA 2003 Schedule 4 para 1 — defines payments in money or money’s worth
- FA 2003 Schedule 5 para 9 — separates rent from other lease payments
- FA 2003 Schedule 17A para 18 — defines reverse premiums and excludes them from SDLT
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 contents page does not explain when a payment is a premium rather than rent or another payment.
- The statutory material checked is current only to 17 November 2025. Later transactions need a current-law check.
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 agreement for lease
- details of each payment and who pays it
- whether the event is a grant, assignment or surrender
- the transaction’s effective date
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 (SDLT): lease premiums and reverse premiums [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 - directs how payments for land transactions are treated https://www.legislation.gov.uk/ukpga/2003/14/section/50/2025-11-17 - FA 2003 Schedule 4 para 1 - defines payments in money or money's worth https://www.legislation.gov.uk/ukpga/2003/14/schedule/4/paragraph/1/2025-11-17 - FA 2003 Schedule 5 para 9 - separates rent from other lease payments https://www.legislation.gov.uk/ukpga/2003/14/schedule/5/paragraph/9/2025-11-17 - FA 2003 Schedule 17A para 18 - defines reverse premiums and excludes them from SDLT 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/sdltm11040 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 contents page does not explain when a payment is a premium rather than rent or another payment. - The statutory material checked is current only to 17 November 2025. Later transactions need a current-law check. 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 (SDLT): lease premiums and reverse premiums
Search Land Tax Advice with Google
