Guide on Calculating SDLT for Successive Linked Leases Under FA03/SCH17

SDLT on Successive Linked Leases

Where leases are treated as a successive linked series, SDLT on the rent is worked out as if there were one single lease rather than separate leases. The deemed lease starts on the date of the first lease and uses the total term and total rent of all the linked leases, while any premium or other non-rental payment is still taxed separately under the normal rules.

• Leases may be linked if they form part of a single scheme, arrangement or series between the same parties or connected persons.
• If the successive linked lease rule applies, SDLT on rent is calculated as though one lease had been granted on the date of the first lease.
• The deemed lease uses the combined length of all the lease terms and the total rent payable under all the linked leases.
• Premiums and other non-rental consideration are not simply merged into the rent calculation; they are charged under the ordinary SDLT rules.
• Any relief or exemption applying to the original lease generally carries over to the deemed single lease.
• The main practical issue is often deciding whether the leases are truly linked as a successive series in the first place.

Scroll down for the full analysis.

SDLT on successive linked leases: how the tax is calculated

This page explains how SDLT works where two or more leases are treated as linked because they form a successive series. In that situation, the law does not look at each lease in isolation. Instead, it can treat the series as if it were a single lease, which can change the SDLT position on the rent. This matters most where a tenant takes one lease and then later takes another linked lease from the same landlord or a connected person.

What this rule is about

SDLT has special rules for linked transactions. Broadly, transactions are linked if they are part of a single scheme or arrangement, or a series of transactions, between the same parties or connected persons.

This page deals with a particular type of linked transaction: successive linked leases. These are leases that are linked as a series. Where that happens, Schedule 17A paragraph 5 of Finance Act 2003 requires the leases to be treated as though they were one lease for the purpose of calculating SDLT on the rent.

The point of the rule is to stop the tax result being determined simply by splitting what is, in substance, one continuing leasing arrangement into separate lease grants.

What the official source says

The official material says that where leases are linked as a successive series, SDLT is calculated as if there were a single lease:

• granted when the first lease in the series was granted,
• for a term equal to the total of the terms of all the leases in the series, and
• for rent equal to the total rent payable under all the leases in the series.

That deemed single-lease treatment applies to the rent calculation under Schedule 17A paragraph 5.

The source also makes two further points:

• Any non-rental consideration, such as a premium, is not dealt with by simply aggregating everything under the successive lease rule. Instead, non-rental consideration is charged under the ordinary charge provisions in section 55 of Finance Act 2003.
• If the original lease benefited from a relief or exemption, the deemed lease created by Schedule 17A paragraph 5 continues to benefit from that relief or exemption.

The example given in the source is a sale and leaseback leaseback element that is exempt under section 57A. If the original lease was exempt in that way, the deemed single lease remains exempt.

What this means in practice

If a later lease is a successive linked lease, you do not simply calculate SDLT on each lease rent separately and stop there. For rent, you must step back and treat the whole series as one notional lease running from the date of the first lease, with the combined term and combined rent of all the linked leases.

In practice, this can increase the amount of rent brought into the SDLT calculation because:

• the term becomes longer,
• the rent stream is looked at across the whole series, and
• the calculation is anchored to the first lease in the series.

But this rule is specifically about how to calculate SDLT where the leases are already within the successive linked lease rules. The critical first question is whether the leases are in fact linked in that way. The source refers separately to the guidance on what counts as successive linked leases.

You also need to keep rent and non-rent consideration separate in your analysis. The successive linked lease rule tells you how to calculate the rent charge. It does not mean every premium or other non-rental payment is simply rolled into one combined lease calculation. Those amounts are charged under the normal rules for chargeable consideration.

Reliefs and exemptions also remain important. If the original lease was relieved or exempt, the deemed single lease is not stripped of that treatment merely because the legislation deems the series to be one lease for calculation purposes.

How to analyse it

A sensible way to approach the issue is as follows.

• First, identify all the lease transactions and the parties involved.
• Ask whether the leases are linked transactions under section 108. The source says this requires a single scheme or arrangement, or a series of transactions, between the same parties or connected persons.
• Then ask whether they are linked as a successive series of leases. That is the trigger for the special Schedule 17A paragraph 5 calculation.
• If they are, calculate the rent position as though there were one lease granted on the date of the first lease.
• Use a term equal to the aggregate of all the lease terms in the series.
• Use rent equal to the total rent payable under all the leases.
• Consider separately whether there is any non-rental consideration on any of the leases, such as a premium. That is charged under the ordinary rules rather than simply folded into the rent calculation.
• Check whether the original lease had the benefit of any relief or exemption. If it did, the deemed lease continues to benefit from that treatment.

Questions worth asking include:

• Are these genuinely separate commercial arrangements, or are they part of one overall arrangement or series?
• Are the parties the same, or are connected persons involved?
• Is the tax issue only about rent, or is there also a premium or other non-rental payment?
• Was the first lease relieved or exempt, and if so does that carry through to the deemed lease?

Example

Illustration: A tenant is granted a lease by a landlord, and later takes another lease that is treated as a successive linked lease in the same series. If the rule applies, SDLT on the rent is not worked out by looking at the second lease on its own. Instead, the law treats the two leases as one lease granted on the date of the first lease, for a term equal to both lease terms added together, and for rent equal to the total rent under both leases.

If the second lease also involved a premium, that premium would not simply disappear into the combined rent calculation. It would need to be considered separately under the normal charge rules for non-rental consideration.

If the first lease had been exempt, for example because it fell within an exemption mentioned in the source, the deemed combined lease would continue to enjoy that exemption.

Why this can be difficult in practice

The hard part is often not the arithmetic. It is deciding whether the leases are linked as a successive series in the first place.

The statutory definition of linked transactions is broad. Terms such as single scheme or arrangement, series of transactions, and connected persons can require a close look at the facts. Timing, commercial purpose, documentation, and the relationship between the parties may all matter.

Another practical difficulty is separating the rent analysis from the treatment of premiums or other non-rental consideration. Readers sometimes assume that if leases are treated as one deemed lease, every element of consideration must be merged into one calculation. The source does not say that. It says non-rental consideration is charged under section 55.

Reliefs and exemptions can also be easy to overlook. The source makes clear that where the original lease qualified for relief or exemption, that treatment carries over to the deemed lease. That can materially affect the outcome.

Finally, this page only addresses the calculation method once the leases are successive linked leases. It does not itself set out the full test for deciding whether leases fall into that category.

Key takeaways

• Where leases are successive linked leases, SDLT on the rent is calculated as if the series were one lease.
• The deemed lease starts when the first lease was granted and uses the combined term and combined rent of all the linked leases.
• Premiums and other non-rental consideration are dealt with separately under the ordinary charge rules, and any relief or exemption on the original lease continues to apply to the deemed lease.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guide on Calculating SDLT for Successive Linked Leases Under FA03/SCH17

View all HMRC SDLT Guidance Pages Here