Guide on SDLT Implications for Leases Continuing Beyond Fixed Terms

SDLT when a lease continues after its fixed term

If a tenant stays on after a lease’s fixed term ends, SDLT may still be affected if the lease continues in law and rent remains payable. In those cases, HMRC treats the lease as extended by one year at a time for SDLT purposes, which can increase the rent calculation and trigger a new or extra SDLT return.

• The rule applies where a lease continues by its own terms or by law, such as some protected business tenancies and statutory periodic residential tenancies.
• For SDLT, the lease is treated as extended by one extra year beyond the original term, and by further one-year periods if it continues.
• This can increase the net present value of the rent and create an SDLT charge or an additional SDLT charge.
• It does not usually apply if the occupier is only a trespasser, or is in occupation under a tenancy at will or a licence.
• If the extra deemed year makes the lease notifiable or increases SDLT, a return or further return may be needed within the relevant filing deadline.
• A special exclusion may apply to certain leases granted before 1 December 2003 that were already chargeable to stamp duty.

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SDLT and leases that continue after the fixed term ends

This page explains what happens for SDLT when a lease does not simply stop at the end of its stated fixed term. In some cases, the law treats the lease as continuing and that can affect the lease term used for SDLT. That matters because SDLT on leases depends in part on the lease term and the rent payable over that term.

What this rule is about

Some leases are granted for a fixed term, but the tenant may lawfully stay on after that term ends. This is often called holding over.

For SDLT, the key question is not just whether the tenant remains in occupation. The real question is whether, in law, the lease is treated as continuing and rent remains payable. If it is, the lease may be treated as extended for SDLT purposes, even if no new formal lease has yet been signed.

This rule is especially relevant to:

• business tenancies protected by Part II of the Landlord and Tenant Act 1954;
• some situations where a new implied lease arises after the end of a contracted-out business tenancy or where renewal rights are lost; and
• most residential shorthold tenancies that move into a statutory periodic tenancy after the initial fixed term.

What the official source says

HMRC’s view, based on Schedule 17A paragraph 3 Finance Act 2003, is that where a lease continues after the fixed term because of its terms or by operation of law, it is treated for SDLT as extended by one year beyond the original term.

This applies regardless of whether some other legal rule would treat the continuation as longer or shorter than a year.

If the lease is still continuing after that extra year, it is treated as extended by another year, and then another year, until either:

• a new lease is granted, or
• the existing lease is determined.

HMRC also distinguishes this from cases where the tenant remains in occupation but there is no continuing lease for SDLT purposes. For example, if the tenant is merely trespassing, or occupies under a tenancy at will or a contractual licence, HMRC says those situations do not have SDLT consequences under this rule.

The source also states that where the increased net present value of the rent over the extended term creates an SDLT charge, or an additional SDLT charge, a return or further return is required.

For returns triggered because the lease becomes notifiable for the first time from 1 March 2019, the return must be made within 14 days of the end of the relevant year of holding over. The source also refers to older 30-day time limits in other cases, submitted by letter to Stamp Taxes.

There is also a specific exception for leases granted before 1 December 2003. If an SDLT charge or extra SDLT charge would arise only because the lease term is treated as extended under this legislation, that rule does not apply to leases granted before 1 December 2003 if they were chargeable to stamp duty.

What this means in practice

The practical point is that SDLT on a lease is not always fixed once the original lease is granted. If the lease legally continues after the fixed term, the deemed term for SDLT may increase year by year.

That can matter in two ways:

• the extended term may increase the net present value of the rent; and
• that increase may create an SDLT liability or a further SDLT liability that did not exist before.

Not every occupier who stays after expiry is caught. A person who simply remains in the property after the contractual term ends is not enough on its own. You need to identify the legal basis of that occupation.

In broad terms:

• if the original lease is treated by law as continuing, this rule may apply;
• if occupation after expiry is on some different basis, such as trespass, tenancy at will, or licence, HMRC says this rule does not apply.

This distinction is important for conveyancers and advisers because the label used in correspondence is not decisive. The legal status of the occupation matters.

How to analyse it

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

• Has the fixed contractual term ended?
• Is the tenant still in occupation?
• Does the lease continue in law after the fixed term, whether under its own terms or by operation of law?
• Is rent still payable during that continued period?
• Is this a protected business tenancy, a statutory periodic residential tenancy, or another case where an implied lease may arise?
• Alternatively, is the occupier there only as a trespasser, under a tenancy at will, or under a licence?
• If the lease is treated as continuing, does adding one more year increase the net present value enough to create SDLT or extra SDLT?
• If the lease continues for longer, does the same issue arise again at the end of the next year of holding over?
• Was the lease granted before 1 December 2003, so that the special exclusion may be relevant?

The source material does not set out the detailed NPV calculation. The important point here is that each additional deemed year can affect the rent element of SDLT.

Example

Illustration: a tenant has a lease for a fixed term of five years. At the end of year five, the tenant remains in lawful occupation and the tenancy continues by operation of law, with rent still payable. For SDLT purposes, the lease is treated as extended by one year beyond the original fixed term. If that extra year increases the rent NPV enough to create an SDLT charge or an additional charge, a return or further return is needed.

If the tenant is still lawfully holding over at the end of that extra year, the lease is treated as extended by another year, and the SDLT position must be considered again.

By contrast, if after expiry the occupier is only there under a tenancy at will while a renewal is negotiated, HMRC’s stated view is that this does not itself trigger SDLT consequences under this holding-over rule.

Why this can be difficult in practice

The difficult part is often working out the legal character of the occupation after the fixed term ends.

That is not always obvious from the facts. Parties may assume a tenant is simply “holding over”, but in legal terms the position could instead be:

• a continuing protected tenancy;
• a new implied lease;
• a tenancy at will;
• a licence; or
• unauthorised occupation.

Those distinctions matter because HMRC’s guidance only treats certain continuing lease situations as relevant for SDLT.

Another practical difficulty is timing. The source refers to different filing deadlines depending on whether the return is one that becomes notifiable for the first time from 1 March 2019, and it also refers to older 30-day rules. In a real case, the correct deadline depends on the type of return and the timing.

There may also be uncertainty where a lease ends and the parties are negotiating renewal terms. During that period, the legal basis of occupation can change, and the SDLT consequences may change with it.

Key takeaways

• For SDLT, some leases that continue after the fixed term are treated as extended by one year at a time.
• The rule applies only where the lease continues in law and rent remains payable, not merely because the occupier stays in the property.
• Each extra deemed year can create or increase SDLT on the rent element, so the position may need to be reviewed annually until the lease ends or is replaced.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guide on SDLT Implications for Leases Continuing Beyond Fixed Terms

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