Stamp duty when a business lease carries on after it ends
Holding over can increase SDLT
When a business tenant stays after a fixed lease term ends, SDLT can be recalculated as if the lease were longer.
- One extra year may create extra SDLT.
- Further occupation may add further years.
- HMRC’s example is historical guidance, not a statement of the current filing process.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty when a business lease carries on after it ends
Staying in a business property after a lease ends can create extra stamp duty land tax. When a business tenant remains in the property after the fixed term ends, SDLT can treat the lease as lasting another year, even though nobody has signed a new lease. That matters.
What this rule is about
A fixed term is the stated length of a lease. Yet some business tenants remain in occupation while they and their landlord discuss a replacement lease. People often call this holding over.
For SDLT, the law can treat continued occupation after the stated term has ended, while the tenant remains and rent continues, as an extra year added to the original lease. That can increase the value of the rent used for SDLT.
It is easy to miss. You may have filed the original SDLT return years earlier.
What the official source says
HMRC’s example concerns a ten-year non-residential lease. Although it ended on 24 March 2015, the tenant stayed, negotiations continued and annual rent of £60,000 continued to be paid. HMRC uses those facts in its example.
At first, the legislation treats this type of lease as having its original fixed term. Once occupation continues beyond that point, the law treats it as one year longer. If occupation continues again, the law adds another year.
- The original lease began on 25 March 2005.
- Its stated ten-year term ended on 24 March 2015.
- On 25 March 2015, it counted as an eleven-year lease for SDLT.
- On 25 March 2016, it counted as a twelve-year lease because occupation continued.
- The rent value is recalculated whenever another deemed year is added.
HMRC’s manual is guidance, not law. Its example shows HMRC’s view of how the statutory treatment worked on these facts.
What this means in practice
Extra SDLT does not mean the whole tax bill starts again. You compare the tax due on the longer lease with the SDLT already paid. That difference is the extra amount.
What actually matters is not whether talks are friendly or close to agreement. Instead, ask whether the tenant stayed and whether the lease falls within the statutory holding-over treatment, because those facts determine the SDLT position. They are key.
- Keep track of the stated lease end date.
- Check whether the tenant stayed after that date.
- Record rent paid during the extra period.
- Keep the original SDLT return and payment evidence.
- Recalculate the rent value for each added year.
- Do not assume no new document means no SDLT effect.
How to analyse it
Start with the old lease. Then work forward, one year at a time.
- Read the lease to identify its fixed term.
- Confirm the day that term ended.
- Check whether the tenant remained in occupation after it ended.
- Establish the rent payable while the tenant remained.
- Work out whether one or more full holding-over years have passed.
- Calculate the rent net present value for the longer counted term.
- Deduct SDLT already paid from the revised SDLT figure.
- Check whether a new lease was granted during the period.
Net present value is a way of putting a value today on rent due over several years. It is not simply the annual rent multiplied by the number of years.
Example
In HMRC’s example, the original ten-year lease had rent of £60,000 a year. Its rent net present value was returned as £498,996, and SDLT of £3,489 was paid.
After the tenant stayed for the first extra year, the lease counted as eleven years long. HMRC calculated a new rent value of £540,093 and total SDLT of £3,900. As £3,489 had already been paid, the extra SDLT was £411.
Because occupation continued for a second year, HMRC treated the lease as twelve years long, with a rent value of £579,800 and SDLT of £4,298. That was the revised position. After credit for the £3,900 already paid, the further amount was £398.
In this historical example, the manual says that the first extra amount should have been notified by 23 April 2016 after continued occupation had extended the lease beyond its original term. The second should have been notified by 23 April 2017.
Why this can be difficult in practice
Lease expiry dates are often treated as a property-management issue. They can also be a tax issue. Files may sit with different people, and the original SDLT paperwork may be hard to find.
You might think a new lease will always end the problem. Not necessarily. Its timing, premises and terms can matter.
- A tenant may stay without a formal written extension.
- Rent may change while lease talks continue.
- The parties may disagree about when occupation really ended.
- A replacement lease may cover the same premises or only part of them.
- The 2015 letter process in HMRC’s example should not be assumed to be today’s process.
Key takeaways
- Holding over can add a year to a fixed-term lease for SDLT.
- Each extra year can produce a further SDLT calculation.
- Earlier SDLT payments reduce the extra amount due.
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 that continue after their fixed term
- FA 2003 Schedule 5 para 2 — stamp duty calculation on lease rent
- FA 2003 Schedule 5 para 3 — net present value of lease rent
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 is holding over, and whether the lease can continue by operation of law, depends on the lease terms and the facts of occupation.
- The source does not establish the correct current filing method for a lease that continues after the fixed term.
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 or break provisions
- The fixed-term end date and dates of continued occupation
- Rent records for the period after the fixed term
- The original SDLT return, calculation and payment details
- Any new lease agreed while the tenant remained in occupation
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 business lease carries on after it ends [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 that continue after their fixed term https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/3/2025-11-17 - FA 2003 Schedule 5 para 2 - stamp duty calculation on lease rent https://www.legislation.gov.uk/ukpga/2003/14/schedule/5/paragraph/2/2025-11-17 - FA 2003 Schedule 5 para 3 - net present value of lease rent https://www.legislation.gov.uk/ukpga/2003/14/schedule/5/paragraph/3/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm14065 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 is holding over, and whether the lease can continue by operation of law, depends on the lease terms and the facts of occupation. - The source does not establish the correct current filing method for a lease that continues after the fixed term. 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 business lease carries on after it ends
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