Linked leases: how SDLT on rent is split between leases
Linked leases and rent SDLT
Where leases form one arrangement, SDLT may combine the value of their future rent before applying the rent tax bands.
- Add the rent NPV figures for linked leases.
- Apply the appropriate residential or non-residential rent table.
- Split the total tax by each lease’s share of the combined NPV.
Scroll down for the full analysis.
Read the original guidance here:
Linked leases: how SDLT on rent is split between leases
When two leases form part of one deal, stamp duty on their rent can be higher than it would be if you considered each lease alone. SDLT first adds their rent values together, then apportions the result fairly between them. This rule concerns rent. It does not create a second charge on the same rent.
What this rule is about
A lease can give rise to SDLT on rent due over its term. The tax uses the rent’s net present value, usually called NPV. This values future rent in today’s money.
The same buyer and seller, or connected people, can sometimes arrange two or more leases as linked transactions. Broadly, they then form one scheme, arrangement or series.
You may think that putting each lease in a separate document will keep it below a tax band, even when all the documents form one arrangement. It will not.
The law combines the NPV figures for linked leases before applying the rent tax bands. It then gives each lease its proportionate share of the total.
What the official source says
HMRC’s manual explains how it applies the linked-lease rule where the special rule for successive leases does not apply. HMRC manuals explain its view. They are not law. The legislation is the starting point.
For each lease, the method has two stages: work out the tax on all linked rent together, then split that tax by each lease’s share of the total NPV.
- Work out the NPV of rent for the first lease.
- Work out the NPV of rent for the second lease.
- Add those figures to get the total NPV of all linked rent.
- Apply the rent SDLT bands to that total figure.
- When choosing the residential or non-residential table, use all land covered by the linked leases rather than considering each lease on its own.
- Split the total tax using each lease’s NPV as a share of the total NPV.
HMRC also says to carry out a separate calculation for each lease. Where the parties granted the leases at different times, you must account for the possibility that the relevant bands and thresholds differ. Dates matter.
What this means in practice
The linked leases remain separate leases. But you cannot test their rent against the tax bands separately. For this limited calculation, SDLT considers the combined rental value first.
This can raise the total SDLT on rent. Combining the figures may push part of the total NPV into a higher band.
- Do not calculate one lease’s rent tax on its own when that lease belongs to the same overall deal as other linked leases.
- Keep the NPV calculation for every lease, not just the combined figure.
- Check the whole area covered by all the leases before choosing the rent tax table.
- Record the relevant date for each lease before using rates and thresholds.
There is an important divide here. Successive linked leases of the same, or nearly the same, premises have their own rule. HMRC treats them as one lease for broader SDLT purposes. HMRC says the proportional split described on this page is not the method for those leases.
How to analyse it
Start with the documents, not the labels on them. Labelling arrangements as separate leases does not decide whether they are linked.
- List every lease granted as part of the wider arrangement.
- Ask whether they form one scheme, arrangement or series.
- Check whether the parties are the same or connected.
- Work out whether the leases are successive leases of the same or substantially the same premises.
- Calculate the NPV of rent for each lease.
- Add the NPV figures for linked leases that contain rent.
- Identify whether all the linked land is residential property.
- Apply the correct rent bands for each lease’s relevant date.
- Split the resulting tax in the NPV proportion for that lease.
What actually decides the split? The rent NPV does, not the floor area, headline annual rent or number of documents.
Example
Here is a simple illustration. Ava takes two linked residential leases on the same day as part of one arrangement. The first has rent NPV of £100,000. The second has rent NPV of £200,000. Their total NPV is therefore £300,000.
Using the residential rent table in the legislation, the first £125,000 is taxed at 0% and the remaining £175,000 at 1%. The total rent SDLT is £1,750.
The first lease represents one third of the total NPV: £100,000 divided by £300,000. Its share of the tax is £583.33. The second represents two thirds, so its share is £1,166.67. Together, those amounts equal £1,750.
If Ava had calculated each lease on its own, she would have reached a different result. That would miss the linked-lease rule.
Why this can be difficult in practice
The maths is usually the easy part. The harder issue is whether the leases are genuinely linked and, if they are, whether they instead count as successive leases of the same or nearly the same premises. That distinction matters.
Plans, heads of terms, emails and the timing of the grants can all matter. So can the relationship between the parties. One deal may be split into leases for sensible commercial reasons, but it can still be a single scheme for SDLT.
- Separate completion dates do not automatically mean separate SDLT treatment.
- Different premises do not automatically stop leases being linked.
- One non-residential part can affect which rent table applies to the combined land.
- A calculation using current bands may be wrong for an older lease grant.
Key takeaways
- Linked leases can require their rent NPVs to be added together.
- The total rent tax is split in proportion to each lease’s NPV.
- Check first whether the leases are linked, or are successive leases with a different rule.
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 56 — rent SDLT is calculated under Schedule 5
- FA 2003 section 108 — when transactions count as linked transactions
- FA 2003 Schedule 5 para 2 — calculating rent SDLT for linked lease transactions
- FA 2003 Schedule 5 para 3 — working out the net present value of rent
- FA 2003 Schedule 17A para 5 — treatment of successive linked leases as one lease
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 leases form one scheme, arrangement or series can depend on the full facts and documents.
- Whether leases are successive leases of the same or substantially the same premises may not be obvious from their titles alone.
- The correct rates and thresholds depend on the date relevant to each lease and must be checked for that date.
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.
- signed leases and any agreements for lease
- details of the parties and connected persons
- the commercial documents showing why the leases were granted
- rent schedules, lease terms and rent-free periods
- the land plans for every linked lease
- the dates each lease was granted or took effect
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 Linked leases: how SDLT on rent is split between leases [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 56 - rent SDLT is calculated under Schedule 5 https://www.legislation.gov.uk/ukpga/2003/14/section/56/2025-11-17 - FA 2003 section 108 - when transactions count as linked transactions https://www.legislation.gov.uk/ukpga/2003/14/section/108/2025-11-17 - FA 2003 Schedule 5 para 2 - calculating rent SDLT for linked lease transactions https://www.legislation.gov.uk/ukpga/2003/14/schedule/5/paragraph/2/2025-11-17 - FA 2003 Schedule 5 para 3 - working out the net present value of rent https://www.legislation.gov.uk/ukpga/2003/14/schedule/5/paragraph/3/2025-11-17 - FA 2003 Schedule 17A para 5 - treatment of successive linked leases as one lease https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/5/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm17050 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 leases form one scheme, arrangement or series can depend on the full facts and documents. - Whether leases are successive leases of the same or substantially the same premises may not be obvious from their titles alone. - The correct rates and thresholds depend on the date relevant to each lease and must be checked for that date. 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: Linked leases: how SDLT on rent is split between leases
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