Stamp duty when a lease continues after its fixed term
Lease holding over and SDLT
A fixed-term lease that continues by law can be treated as longer for SDLT. That may increase tax on the rent and create a further filing obligation.
- Check whether the old lease legally continued.
- Review the SDLT position after each extra year.
- Do not assume continued occupation alone decides the answer.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty when a lease continues after its fixed term
If your lease carries on beyond its stated end date, SDLT rules may still apply. For SDLT purposes, a lease that continues legally can count as running for an additional year. As a result, the rent tax can rise and another return may sometimes be required.
What this rule is about
Many leases end on a clear fixed date. The tenant may nevertheless remain, pay rent and keep using the property. People often call this holding over.
That does not necessarily mean that the old lease continued. The legal basis on which the tenant stays matters. It may determine whether SDLT has any consequence at all.
The key question is whether the lease continued under its own terms or by law, or whether a different arrangement started.
The distinction may seem narrow. It can change the SDLT bill.
What the official source says
HMRC’s manual explains that a fixed-term lease which continues until ended, or can continue by law, is initially dealt with as ending on its stated date. Where it continues, SDLT treats the lease as lasting one additional year. Every subsequent year of continuation can add a further year.
- A business lease may continue after its fixed end date under the rules for protected business tenancies.
- A residential shorthold tenancy may become a statutory periodic tenancy after its initial fixed term.
- This rule can cover a lease with a fixed term that then continues until someone ends it.
- After the first extra year, SDLT may add one further year if the lease continues.
- The yearly treatment continues until the lease ends or the landlord grants a new lease.
The law supports this annual approach. It first counts the lease as lasting only for its original fixed term. For every period in which the lease continues, SDLT counts it as lasting one year longer, then two years longer, and so on.
However, if the lease actually ends during one of those additional years, the law counts it only up to its actual end date. It does not automatically count the lease as lasting for a full extra year after it ends.
HMRC also makes an important distinction. A tenant remaining after expiry may be trespassing. Alternatively, they may hold a tenancy at will or a contractual licence. HMRC says that those situations do not produce this holding-over SDLT effect.
- Check whether the tenant had a legal right for the old lease to continue.
- Do not assume that continued occupation is enough on its own.
- Check whether rent remained due under the continuing arrangement.
- Read any agreement that excluded renewal rights or changed them.
- Keep the date when the original fixed term ended.
What this means in practice
SDLT on lease rent takes account of the rent across the lease term. A longer term can make SDLT use a higher value in its calculation. The additional year therefore matters even when nobody signs a new lease.
A lease continuing does not by itself make a return due. The outcome depends on the effect of the extra period. The legislation distinguishes between two situations.
- If the continued lease becomes notifiable for the first time, a return is due within 14 days after the relevant extra year ends.
- If tax becomes payable where none was due before, a further return is due within 30 days after that extra year ends.
- If extra SDLT becomes payable after the lease continues through an extra year and the calculation for that period produces additional tax, a further return is also due within 30 days after that extra year ends.
- The return must include a calculation of the SDLT due.
- Any SDLT due must be paid by the filing deadline.
HMRC’s manual says to send its return or further return by letter to Stamp Taxes. Filing arrangements can change, so check the current HMRC method before acting.
The calculation applies the rates in force on the original lease’s effective date. It does not apply rates that happen to be in force when the additional year ends.
How to analyse it
Begin with the legal position rather than the label people use. Describing the arrangement as a holdover does not answer the SDLT question.
- Find the lease’s original fixed end date.
- Check whether its wording says it continues until ended.
- Check whether a legal rule allowed it to continue after expiry.
- Find out whether the tenant remained in occupation after that date.
- Check what rent was due and paid during that period.
- Decide whether the old lease continued or a different arrangement arose.
- Work out when the lease actually ended, if it did.
- Recalculate the SDLT position using the added period.
- Check whether the lease first became notifiable or whether extra SDLT arose.
- Check whether the landlord granted a new lease during the extra period.
A new lease can alter the answer. If the landlord grants the tenant a new lease of the same or substantially the same premises during the extra year, the special holding-over charge may not arise where the statutory backdating rule applies. The new lease’s start date and wording matter.
Example
Amir has a five-year business lease. Its fixed term ends on 30 June. He remains in the premises, rent continues to be due, and the lease continues by law. SDLT first treats it as a five-year lease. When it is still continuing on 30 June the following year, SDLT treats it as a six-year lease.
Suppose the lease continues for a further year. SDLT can then count it as a seven-year lease. Check the SDLT calculation after each relevant additional period. If the extra rent creates additional SDLT, Amir may have to make a further return within 30 days after that period ends.
Now change one fact. If Amir’s lease was validly excluded from the renewal rules and he simply stayed without a new agreement, the facts may instead show trespass, a tenancy at will or a licence. HMRC says those do not have this SDLT effect. The paperwork and conduct of both sides matter.
Why this can be difficult in practice
This issue is often missed because the original SDLT return was filed years earlier. The tenant may regard the post-expiry period as temporary. SDLT may nevertheless call for a fresh calculation where the old lease continued in law.
Most people ask whether anyone signed a new lease. That is not the only issue. A lease can continue without one.
- A protected business tenancy may continue, even though its written term has ended.
- A contracted-out business lease may not continue in the same way.
- A residential tenant may have a statutory periodic tenancy after the fixed term.
- A short informal arrangement may be a tenancy at will instead.
- A later document may be a new lease, not proof that the old lease continued.
- A new lease may be backdated to the fixed end date, which has its own SDLT treatment.
- Rent invoices alone may not settle the legal position.
HMRC’s manual also contains an old-lease exception. It says this added-term charge does not apply where a lease was granted before 1 December 2003 and was taxed under the old stamp duty system. This is a historic point, but it may matter for a very old lease.
Key takeaways
- A lease that continues by law can count as one year longer for SDLT.
- Each further year of continuation can require another SDLT check.
- Staying after expiry does not always mean the old lease continued.
- Extra SDLT can bring a 30-day further-return deadline.
- A new lease during the holdover period can change the result.
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 3 — leases continuing after a fixed term
- FA 2003 Schedule 17A para 3A — new lease granted during holding over
- FA 2003 Schedule 17A para 9A — backdated lease granted to holding-over tenant
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 a tenant has continued under the old lease, or has a new implied arrangement, depends on the lease terms and the facts after expiry.
- The supplied HMRC manual refers to a letter to Stamp Taxes. The legislation requires delivery of a return or further return, so the current filing method should be checked before filing.
- The source says the special holding-over charge does not apply to leases granted before 1 December 2003 that were taxable under stamp duty. The supplied statutory extract does not include the relevant transitional wording.
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 signed lease and any renewal, exclusion or break documents.
- The contractual end date and the dates occupation actually continued.
- Evidence of rent paid or due after the fixed term ended.
- Any notices, court documents or correspondence about ending or renewing the lease.
- The SDLT return for the original lease and its effective date.
- The new lease, if one was granted after holding over.
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 when a lease continues after its fixed term [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 3 - leases continuing after a fixed term https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/3/2025-11-17 - FA 2003 Schedule 17A para 3A - new lease granted during holding over https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/3A/2025-11-17 - FA 2003 Schedule 17A para 9A - backdated lease granted to holding-over tenant https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/9A/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/sdltm14060 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 a tenant has continued under the old lease, or has a new implied arrangement, depends on the lease terms and the facts after expiry. - The supplied HMRC manual refers to a letter to Stamp Taxes. The legislation requires delivery of a return or further return, so the current filing method should be checked before filing. - The source says the special holding-over charge does not apply to leases granted before 1 December 2003 that were taxable under stamp duty. The supplied statutory extract does not include the relevant transitional wording. 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: Stamp duty when a lease continues after its fixed term
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