Stamp duty on lease rent: the 2018 threshold examples explained
Lease rent and SDLT
HMRC’s 2018 examples show how the NPV of lease rent is compared with residential or non-residential thresholds.
- Use the rent NPV, not total rent.
- Add NPVs for linked leases.
- Check whether the linked land includes any non-residential property.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty on lease rent: the 2018 threshold examples explained
Stamp duty on lease rent: the 2018 threshold examples explained
Stamp duty on a lease can apply to the rent as well as any upfront price. HMRC’s 2018 examples show that the key figure is the rent’s net present value, or NPV. That figure determines the threshold. It is not simply the total rent written in the lease.
What this rule is about
A lease may involve rent for many years. SDLT uses NPV to value those future rent payments at the start. Put simply, rent due later counts for less than rent due now.
For the 2018 examples on HMRC’s page, HMRC set a £125,000 starting threshold for a lease of a home, while it set a £150,000 starting threshold for business premises or a mix of home and business property. The distinction matters.
It can determine whether any SDLT is due on the rent.
What the official source says
HMRC’s manual gives examples where the only payment is rent. In those examples, HMRC compares the NPV with the relevant threshold and charges SDLT only on the part that exceeds it. Its manual states that approach.
- For a wholly residential lease, the first £125,000 of NPV falls within the 0% band.
- For a wholly residential lease, 1% applies to NPV above £125,000.
- For a wholly non-residential lease, the first £150,000 of NPV falls within the 0% band.
- For a wholly non-residential lease, 1% applies to NPV above £150,000.
- For linked leases, add their NPVs before applying the rent threshold.
- Where linked leases include residential and non-residential property, HMRC says the non-residential or mixed threshold applies.
This is HMRC guidance, not the law itself. The legislation provides the rent tables and the method for linked leases. HMRC’s examples show how it applies them.
What this means in practice
Start with the right figure: the NPV of the rent. A lease may look expensive because its total rent over many years is high. Yet its NPV may be below the relevant threshold.
Do not consider each document alone when two leases form part of one deal, because a shop lease and a storage lease can together take their combined NPVs over the threshold. Check both leases.
- Check whether the lease is for a home, business premises or both.
- Identify every lease agreed as part of the same deal.
- Obtain the NPV for rent under each lease.
- If the leases are linked, combine their NPVs.
- Apply the correct table to the combined land covered by the linked leases.
- Keep any premium or other payment separate from the rent calculation.
The source also directs readers to separate HMRC guidance on reporting. You must still determine whether you need a return, even when no SDLT is due.
How to analyse it
Work through the facts in order, checking for linked leases before you apply a threshold to any one lease, so that you avoid a common error. Take the arrangement as a whole.
- What date did the lease take effect?
- What rent is due over the full term?
- What is the NPV of that rent?
- Is there an upfront premium or another payment as well?
- What land does each lease actually cover?
- Is every part residential, or does any part have a non-residential use?
- Are the leases between the same landlord and tenant?
- Do they form one scheme, arrangement or series of deals?
- If the leases are linked, what total NPV should you calculate?
The law treats transactions as linked where they form part of one scheme, arrangement or series between the same parties, or connected parties. Signing documents together can be relevant, but it is not the whole test.
Example
HMRC gives an example of a shop lease with an NPV of £135,350. The parties enter into a separate storage lease as part of the same deal. Its NPV is £15,650. Both are business leases.
Adding the figures gives £151,000: £135,350 plus £15,650. That is £1,000 above the £150,000 non-residential threshold used in the 2018 example. At 1%, the SDLT on that excess is £10 in total.
Now change one fact. If the two leases were not part of one arrangement, the source’s linked-lease example would not apply. Each lease would need its own analysis.
Why this can be difficult in practice
Although the arithmetic is often straightforward, you may need much closer analysis to decide whether leases are linked and whether the land is wholly residential, wholly non-residential or mixed. Those questions matter most.
A shop with a flat above it makes the point. HMRC’s example treats the linked shop lease and flat lease as mixed. It therefore uses the £150,000 non-residential threshold, not the £125,000 residential one.
- Two documents can still be one wider deal.
- A shared landlord and tenant alone may not settle the issue.
- A flat above a shop can change the table used for linked leases.
- Labels used in marketing may not show the actual land and rights let.
- The lease plan and side agreements may reveal a link that the main lease does not.
- Future rent reviews and unusual rent terms can affect the NPV calculation.
If you only remember one thing, remember to check the whole arrangement, including every lease and the land each covers, before comparing rent with any threshold. Do that first.
Key takeaways
- SDLT on lease rent uses NPV, not the simple total rent.
- Do not use HMRC’s examples, which use 2018 thresholds, as a current-rate calculator.
- Linked leases can be added together and may be taxed using the mixed or non-residential table.
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 56 — rent calculations are governed by Schedule 5
- FA 2003 Schedule 5 para 1 — when the rent calculation rules apply
- FA 2003 Schedule 5 para 2 — rent tax bands and linked lease calculation
- FA 2003 Schedule 5 para 3 — how the rent net present value is calculated
- FA 2003 Schedule 5 para 9 — separate treatment of payments other than rent
- FA 2003 section 108 — when land transactions count as linked
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 two leases form one scheme, arrangement or series is a question of fact.
- Whether land is wholly residential, wholly non-residential or mixed can depend on the land and rights covered by each lease.
- The source examples do not settle how a particular lease with a premium, changing rent or unusual terms should be calculated.
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.
- Signed lease, agreement for lease and any side letters — the land let, parties, term, rent and any linked deal
- Rent schedule and rent review clauses — the payments used to work out the rent net present value
- Completion statement and dated transaction timetable — when each lease took effect and what was paid
- Land Registry title and filed plan for each parcel — the precise property and rights included in each lease
- Planning history and lawful-use records — whether each part was used as a home, shop or other premises
- Room-by-room use and access records at completion — how a flat, shop or shared area was actually used
- Council tax and business rates records — evidence of residential or business occupation
- Business leases, storage agreements and invoices — whether separate space formed part of the same business arrangement
- Dated aerial photographs, floor plans and site photographs — the layout, boundaries and practical separation of the land
- Grazing, agricultural or other occupation agreements — whether land had a separate non-residential use or occupier
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 on lease rent: the 2018 threshold examples explained [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 56 - rent calculations are governed by Schedule 5 https://www.legislation.gov.uk/ukpga/2003/14/section/56/2025-11-17 - FA 2003 Schedule 5 para 1 - when the rent calculation rules apply https://www.legislation.gov.uk/ukpga/2003/14/schedule/5/paragraph/1/2025-11-17 - FA 2003 Schedule 5 para 2 - rent tax bands and linked lease calculation https://www.legislation.gov.uk/ukpga/2003/14/schedule/5/paragraph/2/2025-11-17 - FA 2003 Schedule 5 para 3 - how the rent net present value is calculated https://www.legislation.gov.uk/ukpga/2003/14/schedule/5/paragraph/3/2025-11-17 - FA 2003 Schedule 5 para 9 - separate treatment of payments other than rent https://www.legislation.gov.uk/ukpga/2003/14/schedule/5/paragraph/9/2025-11-17 - FA 2003 section 108 - when land transactions count as linked https://www.legislation.gov.uk/ukpga/2003/14/section/108/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm13105 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 two leases form one scheme, arrangement or series is a question of fact. - Whether land is wholly residential, wholly non-residential or mixed can depend on the land and rights covered by each lease. - The source examples do not settle how a particular lease with a premium, changing rent or unusual terms should be calculated. 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 on lease rent: the 2018 threshold examples explained
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