Indefinite leases and stamp duty: how SDLT treats them
Indefinite leases and SDLT
A lease without a fixed end date is treated as a one-year lease for SDLT at first. If it continues, its assumed term increases year by year.
- Periodic tenancies can be indefinite leases
- Continued occupation can change the SDLT position
- Check the agreement and notice terms
Scroll down for the full analysis.
Read the original guidance here:
Indefinite leases and stamp duty: how SDLT treats them
A lease with no fixed end date can still be relevant for stamp duty land tax. SDLT initially treats it as a one-year lease.
Where a lease has no fixed end date and continues beyond its first assumed year, SDLT adds one assumed year at a time to the term. The term grows annually.
What this rule is about
Some tenancies do not state a final date. They may run from month to month. Others end when either side gives notice. The law needs a way to give such arrangements a term for SDLT.
That assumed term may result in more tax. It may also require a further return.
What the official source says
Only a contents page was supplied by HMRC. It sends readers to separate manual pages on the definition of an indefinite lease and its initial SDLT treatment. HMRC guidance is not law.
- The legislation includes a periodic tenancy.
- It also includes a right that ends after a period of notice.
- It includes a right that can end on notice at any time.
- For SDLT, it first counts as a fixed one-year lease.
What this means in practice
If the tenancy continues beyond its first assumed year, and the same indefinite arrangement remains in place, SDLT treats it as a longer fixed-term lease for SDLT purposes. The term rises yearly.
After the first assumed year, it becomes a two-year lease. After the next year, it becomes a three-year lease.
- Do not assume a rolling tenancy has no SDLT effect.
- Keep track of when each assumed year ends.
- Check whether continued occupation changes the SDLT result.
How to analyse it
Start with the agreement, rather than its label. Labels do not settle the point. This includes a licence, rolling contract or temporary arrangement.
- Read the start, notice and termination clauses.
- Ask whether there is a fixed end date.
- If not, decide whether the arrangement can end on notice.
- Check whether it continued beyond each assumed year.
Example
Amir takes premises under a monthly tenancy with no final date. For SDLT, that tenancy is initially treated as a one-year lease. That is the starting position.
If he remains after that year, it is treated as a two-year lease. The same pattern continues while the tenancy remains in place.
Why this can be difficult in practice
In practice, the agreement may not reveal its true effect. Later letters, renewals and changes to occupation can also matter.
Where occupation continues after an assumed year, and that occupation remains under the same indefinite arrangement rather than ending or being replaced, it may make the transaction notifiable or create tax. Separate return rules then apply. The rules are separate.
- A monthly payment does not by itself answer the question.
- A fixed lease that later continues has different statutory wording.
- A further return may have a deadline after an assumed term ends.
Key takeaways
- An indefinite lease is treated as one year at first.
- Each further year of occupation can extend that assumed term.
- The agreement and notice clauses are central evidence.
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 4 — treating indefinite leases as yearly fixed terms; returns and filing treatment as the lease continues; what counts as 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
- The supplied contents page does not address any particular lease terms, rent, premium or transaction date.
- The statutory material used is recorded as current only to 17 November 2025. A transaction after that date needs a check against current legislation.
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 lease or tenancy agreement and any later variation
- The start date and each period the tenant remained in occupation
- The notice and termination clauses
- Details of rent, any premium and earlier SDLT returns
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 Indefinite leases and stamp duty: how SDLT treats them [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 4 - treating indefinite leases as yearly fixed terms https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/4/2025-11-17 - FA 2003 Schedule 17A para 4 - returns and filing treatment as the lease continues https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/4/2025-11-17 - FA 2003 Schedule 17A para 4 - what counts as 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/sdltm14040 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 supplied contents page does not address any particular lease terms, rent, premium or transaction date. - The statutory material used is recorded as current only to 17 November 2025. A transaction after that date needs a check against current legislation. 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: Indefinite leases and stamp duty: how SDLT treats them
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