Guide to Calculating SDLT for Leases with Part-Year Terms: Example 2

SDLT on Non-Residential Lease Rent for a Part-Year Term

When calculating SDLT on the rent for a non-residential lease, you must use the net present value of the rent over the full lease term. If the lease ends part way through a year, the final period is not ignored or rounded up to a full year. Instead, the rent for that last period is worked out as a time-based fraction of the annual rent and included in the calculation.

• SDLT on lease rent is based on net present value (NPV), not simply annual rent multiplied by the number of years.
• If the lease term includes a final part year, that period must be included as a fraction of a year.
• Where the rent stays the same throughout, the final part-year rent is apportioned by time, using the fraction of the year involved.
• In HMRC’s example, a lease from 1 July 2015 to 31 October 2022 at £75,000 a year is treated as 7 years and 123 days, with final part-year rent of £25,273.
• HMRC’s example gives an NPV of £477,783, and its calculator can apply the part-year adjustment automatically where the rent is unchanged.
• It is important to confirm the true legal start and end dates of the lease, especially if the wording is unclear or the rent changes during the term.

Scroll down for the full analysis.

SDLT on lease rent where the lease term includes part of a year

This page explains how Stamp Duty Land Tax is calculated on the rent element of a non-residential lease when the lease does not end on a whole-year anniversary. The point matters because SDLT on lease rent is based on the net present value of the rent over the term, and a part year at the end of the lease must be reflected correctly.

What this rule is about

For SDLT on the grant of a lease, the rent is not taxed simply by multiplying the annual rent by the number of years. Instead, the rent over the lease term is converted into a net present value, usually called NPV. Where the lease runs for a number of whole years plus an extra period, the extra period must be included as a fraction of a year.

The source material deals with a straightforward case: a non-residential lease with the same annual rent throughout the term, but where the lease ends part way through what would otherwise be the next lease year.

What the official source says

The official example is a lease granted on 1 July 2015, beginning on that date and ending on 31 October 2022, at a rent of £75,000 a year. HMRC treats the term as 7 years and 123 days.

Because the rent does not change during the term, the actual rent used in the SDLT rent calculation is:

• £75,000 for each of the first 7 years, and
• £25,273 for the final part year, calculated as £75,000 × 123/365.

The source also states that if HMRC’s NPV calculator is used, you enter £75,000 for each of the first 5 years and £75,000 as the highest rent, and the calculator works out the part-year proportion automatically.

On those figures, the NPV is £477,783.

What this means in practice

If a lease ends after, say, 7 years and a few extra months, you do not round the term up to 8 full years and you do not ignore the extra months. Instead, you include the actual rent attributable to that final fraction of a year.

In a case where the annual rent stays the same throughout, the final part-year rent is found by apportioning the annual rent by time. In the example, 123 days is treated as 123/365 of a year, so only that fraction of the yearly rent is included for the last period.

This affects the NPV, which in turn affects the SDLT due on the rent. Even where the adjustment seems small, it can matter if the NPV is close to a tax threshold or if the lease has a high annual rent.

How to analyse it

When working out SDLT on lease rent in this kind of case, a sensible approach is:

• Identify the actual start date and end date of the lease term.
• Work out whether the term includes a final period that is less than a full year.
• Check whether the rent stays constant throughout the term or changes at any point.
• If the rent is constant, apportion the annual rent for the final part year by reference to the fraction of the year involved.
• Use those yearly amounts in the NPV calculation.

In the example given by HMRC, the final step is simple because there is no rent review or stepped rent. The annual rent is the same throughout, so the only adjustment is for the final 123 days.

The source also shows an important practical point about HMRC’s calculator: where the rent is unchanged, the calculator can perform the part-year adjustment automatically once the annual figures are entered in the way HMRC specifies.

Example

Illustration based on the official example: a tenant takes a non-residential lease from 1 July 2015 to 31 October 2022 at £75,000 a year.

• Years 1 to 7: £75,000 each year
• Final part year: 123 days
• Part-year rent: £75,000 × 123/365 = £25,273

That final figure is included as the rent for the last part of the term when calculating the NPV. HMRC’s example gives an NPV of £477,783.

Why this can be difficult in practice

The arithmetic is straightforward in a fixed-rent case, but lease terms are not always expressed neatly. Problems can arise if:

• the lease is expressed by reference to dates that do not run from the grant date;
• there are rent changes during the term;
• the lease wording makes the term commencement date or expiry date less obvious than it first appears.

The source itself points readers to separate HMRC material for cases where the term stated in the lease begins from a date before the date of grant. That is a reminder that the first question is always what the legal term of the lease actually is. The SDLT calculation follows from that.

Another practical point is that this example uses a 365-day year for the apportionment. The source does not discuss alternative day-count issues, so the safest reading is to follow the method shown in the official example unless some other rule clearly applies from the wider SDLT framework.

Key takeaways

• If a lease term ends part way through a year, the final period is included as a fraction of a year in the SDLT rent calculation.
• Where the annual rent does not change, the final part-year rent is time-apportioned from the annual rent.
• The correct lease term and dates matter, because the NPV calculation depends on them.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guide to Calculating SDLT for Leases with Part-Year Terms: Example 2

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