Stamp duty on a periodic tenancy that keeps going
Continuing periodic tenancies
HMRC’s historic example shows that a monthly tenancy may be treated as lasting longer each year for SDLT purposes.
- The rent NPV can increase as occupation continues.
- That does not itself create a return duty in HMRC’s example.
- The original lease term is central to the notification question.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty on a periodic tenancy that keeps going
A monthly tenancy may continue for years, yet for stamp duty land tax (SDLT) its reporting status does not alter merely because the assumed term eventually reaches seven years. That alone is insufficient. In a 2005 example, HMRC shows that no return was needed even where the tenancy had continued for seven years and its assumed term had therefore grown. The original grant mattered.
What this rule is about
A periodic tenancy has no set end date. It may run from month to month until either side gives notice. That can make SDLT hard to picture: how do you value rent when nobody knows how long the tenancy will last?
The law initially treats the tenancy as having a fixed length. If it continues, the assumed length increases one year at a time. This changes the net present value, or NPV, of the rent. NPV measures rent over the assumed term on a discounted basis.
What the official source says
HMRC’s manual sets out an oral monthly tenancy that began on 1 March 2005, ran at £600 a month, and was initially treated as a one-year lease. Its NPV is £6,956.
- The effective date is 1 March 2005, the date of grant.
- At first, the assumed term is one year.
- The tenancy continues after 28 February 2006.
- It continues past 1 March 2011 at the same monthly rent.
- By then, HMRC treats it as a seven-year lease from 1 March 2005.
- The NPV has risen to £44,024.
- HMRC says that figure remains below the relevant threshold in its example.
The legislation takes the same broad approach. It initially treats an indefinite lease as a one-year lease.
If it continues, it becomes a two-year lease, then three years, and so on. It also says an indefinite lease counts as a lease of less than seven years when deciding whether it is notifiable.
What this means in practice
The key split is easy to miss: the assumed term can grow for working out the SDLT position, but the original term decides the notification question described in HMRC’s example.
A tenancy may later be treated as lasting seven years, yet it does not become reportable merely because its assumed term reaches that point. That is the distinction.
- Do not assume that seven years of occupation creates a new return duty.
- Start with the terms in place when the tenancy began.
- Keep a record of the start date and monthly rent.
- Check whether the tenancy stayed periodic throughout.
- Separate the rent calculation from the question of reporting it.
How to analyse it
Begin by asking what was actually granted, rather than relying solely on how long the tenant has stayed. A written agreement helps, but an oral tenancy can still be relevant, as HMRC’s example shows.
- Was the tenancy for an indefinite period, such as monthly until notice?
- What was its grant date?
- What rent was due when it began?
- Did the tenant remain after each assumed year ended?
- Did the rent change?
- Was a new lease granted instead?
- Was there a premium or another payment besides rent?
- Were there linked property arrangements?
- What notification rules applied on the relevant date?
Example
Take HMRC’s figures. A tenant starts an oral monthly tenancy on 1 March 2005 and pays £600 each month. HMRC initially treats the lease as lasting one year. Its NPV is £6,956. The tenant stays.
On 1 March 2011, the tenancy has continued long enough for HMRC to treat it as a seven-year lease from the original start date. The NPV is now £44,024.
HMRC says no notification is required in this example. Its reason is not that the lease has stayed short. It has not. Instead, notification is controlled by the original lease term.
Why this can be difficult in practice
People often concentrate on the point at which seven years is reached. That is not the whole question. You must distinguish a continuing periodic tenancy from a new fixed-term lease or a changed agreement.
- Staying in the property is not always the same as continuing the same tenancy.
- A later written agreement may be a new lease.
- A rent increase can change the NPV calculation.
- Other payments may matter as well as monthly rent.
- The HMRC example concerns historic rules and facts from 2005 to 2011.
- HMRC’s manual explains its view; it is not the legislation itself.
Key takeaways
- An indefinite tenancy is treated as one year at first for SDLT.
- If it continues, its assumed term grows year by year.
- HMRC’s example says the original term controls notification.
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 4 — treating indefinite leases as longer fixed-term leases
- FA 2003 Schedule 5 para 2 — calculating stamp duty on 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
- The supplied material does not establish the historic statutory notification rules in full for all leases granted in 2005.
- A current or different periodic tenancy may have different facts, rent, linked arrangements or reporting consequences.
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 original tenancy agreement or oral terms
- The date the tenancy began and each period of occupation
- The rent paid or due in each period
- Any replacement lease, extension, premium or linked arrangement
- The SDLT rules in force on the relevant historic dates
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 on a periodic tenancy that keeps going [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 4 - treating indefinite leases as longer fixed-term leases https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/4/2025-11-17 - FA 2003 Schedule 5 para 2 - calculating stamp duty on lease rent https://www.legislation.gov.uk/ukpga/2003/14/schedule/5/paragraph/2/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm14075 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 material does not establish the historic statutory notification rules in full for all leases granted in 2005. - A current or different periodic tenancy may have different facts, rent, linked arrangements or reporting consequences. 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 on a periodic tenancy that keeps going
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