SDLT when a lease continues after its fixed term
Lease continuation and SDLT
A tenant staying after a fixed lease ends can cause SDLT to be recalculated over a longer term. Extra SDLT may be due, and a return deadline can follow.
- A continued lease is tested in yearly stages.
- The original SDLT date sets the rates and thresholds used.
- First notification and later extra tax have different deadlines.
Scroll down for the full analysis.
Read the original guidance here:
SDLT when a lease continues after its fixed term
Remaining in a property after a lease ends does not necessarily mean stamp duty land tax is finished. Where the tenant remains after the fixed term ends and the law permits the arrangement to continue, SDLT may treat the lease as lasting one year longer, potentially creating extra tax or a fresh deadline. The tenant and landlord need not sign a new lease.
This page covers the rule in England and Northern Ireland. It relies on legislation supplied as current to 17 November 2025. Check the current position if your holding-over period falls later.
What this rule is about
A fixed-term lease can continue when the tenant remains and the law permits the arrangement to continue. People often call this holding over. It may occur while tenant and landlord negotiate a new arrangement.
For SDLT purposes, the law reconsideres the rent for the extended period. It uses net present value, or NPV. NPV discounts rent payable later.
The key point is that SDLT retests the lease year by year. A longer term alone does not automatically oblige the tenant to file an SDLT return.
What the official source says
HMRC’s manual states that a lease continuing beyond its fixed end may become notifiable or result in extra SDLT. The legislation provides for yearly deemed extensions where a fixed-term lease continues.
- After the fixed term, SDLT treats the lease as extended by one year.
- If it continues again, SDLT treats it as extended by a further year.
- The rent NPV must be worked out over the longer deemed term.
- A lease that was below the SDLT limit at first may later cross it.
- A lease already reported may produce more SDLT as its NPV grows.
- Reaching a deemed term of seven years does not, by itself, trigger a return.
If continuation makes the transaction notifiable for the first time, the law allows 14 days after the relevant holding-over year ends to deliver a return. The return must include the tax calculation, with payment due by the same deadline.
When a transaction has already been reported, a holding-over year has ended, and the extended deemed term produces additional SDLT, a further return must be submitted within 30 days after that year ends. The clock starts at the end of that year.
HMRC’s manual says to write to the Stamp Office with the original Unique Transaction Reference Number, or UTRN, and details of both terms. Check that filing method. The legislation describes this as a further return.
What this means in practice
You may have to revisit an earlier SDLT calculation for every year in which the lease continues. The calculation does not use today’s SDLT bands. It uses those applying on the original lease’s effective date.
For the longer deemed lease term, the calculation still uses the rates, thresholds or reliefs in force on the original effective date, rather than later changes to them. The original rules remain relevant.
HMRC also says that VAT added to the rent later should be ignored where VAT was not due when the original grant was made. Ignore that later VAT.
- Keep the original SDLT return and its UTRN.
- Record the fixed lease end date.
- Check whether the tenant remained in occupation after that date.
- Work out the NPV using the extended term.
- Use the SDLT rules that applied at the original effective date.
- Compare the total SDLT on the longer term with tax already paid.
- Check the 14-day or 30-day deadline as soon as a holding-over year ends.
This is the point often missed: SDLT is recalculated across the entire deemed longer lease, rather than only over the extra holding-over year. Then deduct SDLT already paid.
The balance is the additional amount due, if any.
How to analyse it
Begin with the lease originally granted. Then move forward in complete years from its fixed end date. Do not begin on the date when you first spotted the problem.
- Was the original lease for a fixed term that could continue after it ended?
- What was the original effective date for SDLT?
- What rent was included in the original calculation?
- Did the tenant remain after the fixed term ended?
- Did a whole first or later holding-over year pass?
- Was a new lease granted during that year?
- What is the NPV over the deemed longer term?
- Does that result make the transaction notifiable for the first time?
- Has extra SDLT become due compared with what was already paid?
- Which deadline applies to that particular year?
A new lease may alter the result. The legislation contains special rules if, during the holding-over year, a tenant receives a new lease of the same, or substantially the same, premises. Check the dates and property covered by each document.
Example
HMRC illustrates the rule with a non-residential lease that began on 1 December 2020. It lasted 10 years, with annual rent of £50,000. The original rent NPV was £415,830.
Using the rates and £150,000 threshold in force on that date, the SDLT liability was £2,658. That was the original liability.
While a new deal was being discussed, the tenant remained after 30 November 2030. SDLT therefore treated the lease as running for 11 years from 1 December 2020. Its NPV increased to £450,077.
The calculation applied the 2020 rules: £450,077 minus £150,000 equals £300,077. At 1%, this produced total SDLT of £3,000. Deducting the £2,658 already paid left £342 due.
The lease had already been reported; once the first holding-over year ended, the longer deemed term meant that additional SDLT was due. The 30-day rule applied.
If the tenant remained for another complete year, the process would require checking again.
Why this can be difficult in practice
In practice, identifying what legally happened after the end date can be harder than doing the arithmetic. That is often the real difficulty. Following expiry, the tenant may be holding over, may have a new periodic arrangement, or may already hold a new lease.
You may assume that a new agreement always resolves the issue. That is not necessarily so. Its date, wording, and whether it concerns the same premises all matter.
- People confuse the lease’s growing deemed term with a filing trigger.
- They use today’s SDLT thresholds instead of the original date’s thresholds.
- They overlook a full year of holding over while negotiations drag on.
- They do not retain the original UTRN or SDLT calculation.
- They assume a letter is always enough without checking HMRC’s current process.
- They miss a new lease that may affect the continuation rules.
Where the lease ends part way through a deemed extra year, the legislation treats that extension as ending when the lease actually ends. This may affect both calculation and timing.
Key takeaways
- Holding over can increase the rent period used for SDLT.
- A seven-year deemed term alone does not require a return.
- Use SDLT rules from the original effective date.
- Check the filing deadline after every full holding-over year.
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 3 — treating a fixed-term lease as extended yearly; 14-day return deadline when lease first becomes notifiable; 30-day further return and payment rules; ending the deemed extension when lease actually ends
- FA 2003 Schedule 17A para 3A — new lease granted during holding-over period
- FA 2003 Schedule 4 para 2 — including VAT in the amount paid for a transaction
- FA 2003 Schedule 5 para 2 — SDLT on rent using net present value
- FA 2003 Schedule 5 para 3 — calculating the net present value of rent
- FA 2003 section 77 — transactions that require an SDLT return
- FA 2003 section 77A — exception for certain leases under seven years
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 correct administrative method for a later notification needs checking. The statute requires a further return, while the HMRC manual describes a letter giving the original UTRN and lease details.
- This page is confined to a lease continuing after a fixed term. Whether an occupier is holding over, has a periodic tenancy, or has instead entered a new lease depends on the facts and documents.
- The supplied statutory text is current only to 17 November 2025. The position for a continuation period after that date needs current-law verification.
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 renewal or side agreement
- The fixed end date and the dates occupation continued
- Rent records for each holding-over period
- The original SDLT return, calculation, payment record and UTRN
- Evidence of whether a new lease was granted and when
- The SDLT rates, thresholds and any relief applying on the original effective date
- VAT treatment at the original grant 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 SDLT when a lease continues after its fixed term [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 3 - treating a fixed-term lease as extended yearly https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/3/2025-11-17 - FA 2003 Schedule 17A para 3 - 14-day return deadline when lease first becomes notifiable https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/3/2025-11-17 - FA 2003 Schedule 17A para 3 - 30-day further return and payment rules https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/3/2025-11-17 - FA 2003 Schedule 17A para 3 - ending the deemed extension when lease actually ends https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/3/2025-11-17 - FA 2003 Schedule 17A para 3A - new lease granted during holding-over period https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/3A/2025-11-17 - FA 2003 Schedule 4 para 2 - including VAT in the amount paid for a transaction https://www.legislation.gov.uk/ukpga/2003/14/schedule/4/paragraph/2/2025-11-17 - FA 2003 Schedule 5 para 2 - SDLT on rent using net present value https://www.legislation.gov.uk/ukpga/2003/14/schedule/5/paragraph/2/2025-11-17 - FA 2003 Schedule 5 para 3 - calculating the net present value of rent https://www.legislation.gov.uk/ukpga/2003/14/schedule/5/paragraph/3/2025-11-17 - FA 2003 section 77 - transactions that require an SDLT return https://www.legislation.gov.uk/ukpga/2003/14/section/77/2025-11-17 - FA 2003 section 77A - exception for certain leases under seven years https://www.legislation.gov.uk/ukpga/2003/14/section/77A/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/sdltm12050 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 correct administrative method for a later notification needs checking. The statute requires a further return, while the HMRC manual describes a letter giving the original UTRN and lease details. - This page is confined to a lease continuing after a fixed term. Whether an occupier is holding over, has a periodic tenancy, or has instead entered a new lease depends on the facts and documents. - The supplied statutory text is current only to 17 November 2025. The position for a continuation period after that date needs current-law verification. 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: SDLT when a lease continues after its fixed term
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