Leases Continuing After Fixed Term: Guidelines and Example

SDLT and leases that continue after the fixed term

For SDLT, a lease does not always end when its fixed contractual term expires. If the tenancy continues in law after that date, the continuing period may affect the lease term used for SDLT and could change the tax treatment.

• SDLT on leases can depend on rent over the lease term, so the length of the term is an important part of the calculation.
• If a tenant stays on after the fixed term, the key question is whether the original lease continues in law or a new tenancy arises.
• You should not rely only on the number of years stated in the lease, because the legal position after expiry may alter the SDLT outcome.
• Check what the lease and the relevant property law say about what happens at the end of the fixed term, especially if the tenancy rolls on from period to period.
• This area is fact-sensitive, and HMRC guidance is helpful but the final answer depends on the legislation and the legal effect of the tenancy arrangement.

Scroll down for the full analysis.

SDLT and lease terms: when a lease is treated as continuing after the fixed term

This page explains a narrow but important SDLT point: some leases do not simply end for tax purposes when their fixed contractual term expires. In some cases, the lease is treated as continuing beyond that date. That matters because SDLT on leases depends heavily on the length of the term, and changes to the term can affect the tax position.

What this rule is about

SDLT on leases is not based only on the premium paid. It can also depend on the rent payable over the term of the lease. For that reason, the length of the lease term is a central part of the tax calculation.

In practice, a lease may start with a fixed term but then continue in some form after that fixed term ends. This often happens where the tenant remains in occupation and the tenancy continues from period to period rather than stopping completely. The tax question is whether that post-expiry occupation is ignored, treated as a new lease, or treated as a continuation of the original lease.

The official material in this part of the SDLT manual deals with the last of those possibilities: cases where a lease is treated as continuing after the fixed term.

What the official source says

The source material identifies a specific SDLT topic: leases that are treated as continuing after a fixed term has ended. It also indicates that HMRC provides at least one worked example on the point.

Although the extract provided here is only the contents page, the underlying rule is that SDLT does not always look only at the lease’s initial fixed term in isolation. Where the legal effect of the arrangement is that the lease continues after that term, the continuing period may need to be taken into account in determining the lease term for SDLT purposes.

The precise tax treatment depends on the legal nature of what happens after the fixed term ends. The key issue is whether the tenant’s continued occupation is, in law, part of the same lease arrangement continuing, or whether it is instead a separate grant or some other arrangement.

What this means in practice

You cannot safely assume that SDLT consequences are fixed forever by the number of years written on the front page of the lease.

If the lease can continue beyond the fixed term, that may affect:

• the term used in the SDLT calculation,
• whether further SDLT consequences arise after the fixed term, and
• how the return should be understood when the lease does not end cleanly on the contractual expiry date.

For conveyancers, landlords, tenants, and advisers, the practical point is to look beyond the headline term. The legal machinery at the end of the lease matters. A lease that is described commercially as, for example, a five-year lease may not be treated so simply if the tenant has a right to remain, or if the tenancy continues automatically from period to period after the fixed term.

This is especially important where the continuing occupation is built into the legal structure of the tenancy rather than arising informally.

How to analyse it

A sensible way to approach this issue is to ask the following questions.

• What is the fixed term stated in the lease?
• What does the lease or the relevant property law say happens when that fixed term ends?
• Does the tenancy end outright, or does it continue automatically unless and until brought to an end?
• If the tenant remains in occupation, is that continuation part of the same lease arrangement, or is it legally a new tenancy?
• Was the possibility of continuation already built into the grant from the outset?
• Does the SDLT treatment depend on the term as originally granted, or has the legal position changed in a way that creates a different tax outcome?

The legal classification comes first. SDLT follows the legal effect of the arrangement. So the starting point is not the parties’ label, but what the tenancy actually is in law after the fixed term expires.

Example

Illustration: a lease is granted for a fixed period of three years. At the end of that period, the tenant does not have to leave automatically. Instead, under the legal structure governing the tenancy, the arrangement continues from period to period until ended in the proper way.

In that situation, the SDLT analysis may require more than simply treating the lease as a three-year lease that ended on the third anniversary. The continuing period may be relevant because the lease is treated as continuing after the fixed term.

The exact SDLT result would depend on the legal basis of that continuation and the detailed rules that apply to that type of tenancy.

Why this can be difficult in practice

This area is often fact-sensitive because similar real-world situations can have different legal characterisations.

In particular, difficulty can arise where:

• the lease document is short or unclear about what happens after expiry,
• the tenant simply stays in occupation and pays rent,
• property law treats the post-expiry occupation in a way the parties did not fully appreciate, or
• the parties describe the arrangement informally in a way that does not match its legal effect.

Another difficulty is that HMRC manual material explains HMRC’s approach, but the legal answer ultimately depends on the legislation and the underlying law of landlord and tenant. So it is important not to treat a manual heading alone as the full legal test.

Where the facts sit close to the line between continuation of the existing lease and grant of a new tenancy, the SDLT consequences may not be obvious from the paperwork alone.

Key takeaways

• For SDLT, a lease may be treated as continuing after its fixed term rather than simply ending on the stated expiry date.
• The crucial issue is the legal effect of what happens after the fixed term, not just how the parties describe it.
• When reviewing lease SDLT, always check the end-of-term provisions and any continuing occupation arrangements.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Leases Continuing After Fixed Term: Guidelines and Example

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