Treatment of Continuing Indefinite Term Leases: Guidelines and Example

SDLT treatment of leases with no fixed end date

Stamp Duty Land Tax can still apply to a lease that carries on indefinitely or rolls from one period to the next. Even without a fixed end date, the lease term must still be identified under the SDLT rules because it affects the tax calculation, including the rent element and whether later changes create further SDLT consequences.

• SDLT on leases depends on the lease term as well as any rent or premium, so an indefinite lease cannot simply be ignored.
• A rolling, periodic or indefinite tenancy must be analysed by its legal effect, not just by the label used in the paperwork.
• Key points to check include whether there is an initial fixed term, how the lease continues, and what notice either party can give to end it.
• You should distinguish between the original lease grant, any continuation built into it, and any later new or deemed tenancy after expiry.
• The term used for SDLT can affect the net present value of rent, whether a return is required, the amount of tax due, and whether later events trigger more SDLT.
• This area can be tricky because different types of continuing occupation may be taxed differently, so the wording of the lease and the legislation both matter.

Scroll down for the full analysis.

SDLT and leases that continue for an indefinite period

This page explains how Stamp Duty Land Tax can apply where a lease does not end on a fixed date and instead continues indefinitely. That matters because SDLT on leases depends heavily on the lease term. If the term is uncertain or keeps rolling on, you need to know how that term is treated for tax purposes.

What this rule is about

SDLT on a lease is not based only on the rent or any premium. It also depends on the length of the lease. In straightforward cases, that is easy: the lease runs for a fixed number of years. The difficulty arises where the lease continues from period to period without a defined final end date.

The source material deals with “continuing indefinite term leases”. In practical terms, this points to leases that carry on unless and until they are brought to an end, rather than expiring automatically on a set date.

The legal issue is how to measure the lease term for SDLT purposes when the lease could in theory continue indefinitely.

What the official source says

The source page sits within HMRC’s SDLT manual section on the term of a lease and specifically identifies the treatment of continuing indefinite term leases, with a separate example page following it.

Although the extracted text here is only navigational, the subject matter makes clear that HMRC treats this as a distinct issue within the rules for determining the term of a lease. The key point is that an indefinite or continuing lease is not ignored simply because it has no conventional fixed expiry date. Its term still has to be identified or treated in a way that allows the SDLT rules on leases to operate.

What this means in practice

If a lease continues indefinitely, the SDLT analysis cannot stop at saying “there is no fixed term”. Instead, you need to consider how the lease operates in law and how the SDLT lease-term rules apply to that kind of arrangement.

This matters because the term affects the net present value calculation for rent and can therefore affect:

• whether an SDLT return is needed,
• how much tax is due, and
• whether later events trigger further SDLT consequences.

For conveyancers and taxpayers, the practical consequence is that a rolling or indefinite lease should be reviewed carefully rather than treated as if it were outside the normal lease rules.

How to analyse it

When looking at a lease of this kind, the sensible questions are:

• Does the lease have any fixed initial period at all?
• After that period, does it continue automatically from week to week, month to month, or year to year?
• Can either party terminate it, and if so on what notice?
• Is the continuation built into the lease from the start, or is it a separate holding-over arrangement?
• What part of the arrangement is the actual land transaction being taxed?

Those questions matter because SDLT looks at the legal effect of the lease arrangement, not just the label given to it. A document described informally as a “periodic tenancy” or “rolling lease” may still need a more precise legal analysis before the SDLT position can be worked out.

You should also distinguish between:

• the original grant of the lease,
• any continuation mechanism already built into that grant, and
• any later deemed or actual new tenancy arising after the original term ends.

That distinction can affect whether there is one chargeable transaction or more than one.

Example

Illustration: a tenant is granted a lease that runs from month to month and continues until either side gives notice. There is no fixed calendar end date. For SDLT, the absence of a fixed expiry date does not mean the lease is ignored. Instead, the lease term must still be considered under the SDLT rules dealing with indefinite continuing leases, so that the rent element can be brought into the SDLT calculation in the correct way.

The exact tax result will depend on the detailed statutory treatment of that type of lease and the facts of the arrangement.

Why this can be difficult in practice

This area can be difficult because “indefinite” can describe several different legal situations. A lease may be periodic from the outset, may continue after a fixed term under an express clause, or may continue because the tenant remains in occupation after expiry. Those situations are not always taxed in the same way.

Another difficulty is that HMRC manual material explains HMRC’s view, but the legislation determines the legal result. So the starting point is always to identify the legal nature of the tenancy and then apply the statutory SDLT rules on lease term and any later changes.

If the facts are incomplete, it may be impossible to say confidently how the term should be treated. Small drafting differences in the lease can matter.

Key takeaways

• A lease can still fall within the SDLT lease-term rules even if it has no fixed expiry date.
• The legal structure of the tenancy matters more than informal labels such as “rolling” or “indefinite”.
• You need to analyse whether the continuing occupation is part of the original lease or a later arrangement, because that can affect the SDLT treatment.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Treatment of Continuing Indefinite Term Leases: Guidelines and Example

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