Stamp duty when an open-ended lease continues
Open-ended leases and SDLT
A periodic or other open-ended lease is treated as a one-year lease first. If it continues, SDLT treats it as a longer fixed lease each year.
- Continuation can create extra SDLT
- A later return may be needed
- Dates and lease terms are crucial
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty when an open-ended lease continues
An open-ended lease can create a fresh stamp duty issue each year it continues. For SDLT, the law treats it as a one-year fixed lease at first, then as a longer lease if it carries on.
What this rule is about
Some leases have no set end date, including periodic tenancies, tenancies at will, and leases ended by notice. All three can fall within this group.
This sounds like a paperwork point. It can affect SDLT, a later return, and the amount due.
What the official source says
Although the HMRC page supplied here is a contents page, it links to HMRC pages about the treatment of these leases and an example, while Schedule 17A to the Finance Act 2003 sets out the detailed legal rule. Use both sources.
- At first, the law treats an indefinite lease as a fixed lease of one year.
- If it continues, the law treats it as a fixed lease of two years.
- Each further continuation adds one year.
- Ignore other laws’ assumed lease terms.
What this means in practice
Staying put can affect SDLT. Nobody needs to sign again.
Even when nobody signs a new document, staying in the property can matter because each anniversary can require you to check the SDLT position again. Anniversaries matter.
- A later year can make the lease notifiable for SDLT purposes.
- A later year can produce tax where none was due before.
- It can also create extra tax on an earlier SDLT position.
How to analyse it
Start with the lease, not its everyday label. What matters is whether it has a fixed end date and whether it has continued.
- Check whether the lease is periodic or can end on notice.
- Find the date it began and each anniversary after that.
- Check whether the tenant stayed beyond each assumed one-year term.
- Work out whether that continuation changes SDLT or return requirements.
Example
Maya takes a monthly periodic lease on 1 May. SDLT first treats it as a one-year lease. If Maya remains after 30 April the next year, SDLT treats her lease as lasting two years, and you must check the SDLT position using the rules that applied on the lease’s effective date. Maya then has a two-year lease.
Why this can be difficult in practice
People often look only at the original agreement. That can miss the fact that the lease continued. The dates, rent, and any later lease all matter.
- Calling an arrangement a rolling tenancy does not settle the SDLT answer.
- The filing reason sets a later return’s deadline.
- An indefinite lease counts as under seven years for SDLT notification rules.
Key takeaways
- For SDLT, an open-ended lease grows one year at a time.
- Continuation can change the SDLT result.
- Keep the lease, dates, and rent records together.
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 section 120 — points lease rules to schedule 17a
- FA 2003 Schedule 17A para 4 — treats an indefinite lease as yearly fixed terms; disregards other statutory term deeming rules; sets deadline where continuation makes lease notifiable; sets deadline for tax caused by continuation; uses effective-date rates for later tax; requires assessment and payment with later return; applies return administration rules to later returns; treats indefinite leases as under seven years; defines leases for an indefinite period
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 source does not give the lease terms, rent, payments, or dates needed to decide whether tax or a later return is due in any real case.
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 later variation or replacement lease.
- The start date, notice terms, and date the lease actually ended, if it has ended.
- Rent records and details of any premium or other payment.
- Copies of earlier SDLT returns and calculations.
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 an open-ended lease continues [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 section 120 - points lease rules to schedule 17a https://www.legislation.gov.uk/ukpga/2003/14/section/120/2025-11-17 - FA 2003 Schedule 17A para 4 - treats an indefinite lease 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 - disregards other statutory term deeming rules https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/4/2025-11-17 - FA 2003 Schedule 17A para 4 - sets deadline where continuation makes lease notifiable https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/4/2025-11-17 - FA 2003 Schedule 17A para 4 - sets deadline for tax caused by continuation https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/4/2025-11-17 - FA 2003 Schedule 17A para 4 - uses effective-date rates for later tax https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/4/2025-11-17 - FA 2003 Schedule 17A para 4 - requires assessment and payment with later return https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/4/2025-11-17 - FA 2003 Schedule 17A para 4 - applies return administration rules to later returns https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/4/2025-11-17 - FA 2003 Schedule 17A para 4 - treats indefinite leases as under seven years https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/4/2025-11-17 - FA 2003 Schedule 17A para 4 - defines leases for an indefinite period 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/sdltm14068 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 source does not give the lease terms, rent, payments, or dates needed to decide whether tax or a later return is due in any real case. 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 an open-ended lease continues
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