Stamp duty and rent paid before a lease is granted
Pre-grant rent and SDLT
A lease may show a start date before its grant date, but that does not usually make earlier payments rent for SDLT. The documents and the right to payment decide the result.
- Pre-grant payments are excluded from rent by Finance Act 2003 Schedule 5.
- A limited exception applies to certain backdated renewals after holding over.
- An amount that is not rent may still be a premium for the new lease.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty and rent paid before a lease is granted
A lease can state an earlier start date than the day the parties sign or grant it. Earlier payments are not automatically rent for stamp duty land tax, known as SDLT. HMRC may instead treat a payment that is not rent as a premium: an upfront payment for the new lease.
What this rule is about
Backdating is common in commercial property. A landlord may want several leases in one development to share the same review and end dates. Or a tenant may stay after an old lease ends before the tenant and landlord agree a new lease.
A 1 April start date proves little. It does not make every payment from 1 April rent under that lease. HMRC usually uses the grant date.
That distinction changes SDLT calculations. It also prevents the same period being counted twice.
What the official source says
HMRC’s manual says that, as a general approach, SDLT starts a lease term on the date of grant, not on an earlier date the lease states. Finance Act 2003 says that an amount for time before the grant is not rent for SDLT.
HMRC tells you to separate the facts. Do not rely on the word “rent” in an invoice or lease.
- Check whether the landlord has a right under the new lease to receive the payment.
- Check whether the payment covers a period before the landlord granted the lease.
- Check whether it relates to the new lease, an earlier agreement, or an earlier lease.
- If the landlord has no right to the payment, HMRC says there is no SDLT charge on rent for that earlier period.
- That pre-grant payment is not SDLT rent.
- HMRC may still tax that payment as a premium for granting the new lease.
There is an important exception for some renewal leases. It applies where a tenant stays in occupation after the old lease ends, then receives a new lease of the same or substantially the same property.
- The tenant must have remained after the old lease’s contractual end date.
- The new lease must cover the same or substantially the same premises.
- The new lease must state that its term starts on, or immediately after, that end date.
- When those conditions are met, SDLT starts the new lease on the date written in it.
- The calculation may reduce rent for the gap before grant where taxable rent for that time was payable otherwise than under the new lease.
What this means in practice
A printed start date is insufficient. Ask why the parties chose it and what legal right supported each payment.
This is the part people get wrong. Calling an earlier payment “back rent” does not settle its SDLT treatment.
- Keep the lease, payment demands, and any agreement for lease together.
- Match each payment to the days or months it covers.
- Check whether the tenant occupied under a licence or an agreement before the landlord granted the lease.
- Do not assume an excluded rent payment escapes SDLT altogether: it may be a premium instead.
Where a tenant occupied before grant under an agreement for lease, HMRC normally treats the payment as rent under a notional lease. SDLT treats that lease as existing because the agreement was substantially performed, even if the formal lease came later.
How to analyse it
Start with the documents and dates. Then work through the payment. A clear timeline often gives the answer faster than a long argument about the lease wording.
- Identify the date the old lease ended, if there was one.
- Identify when the landlord granted the new lease.
- Read the start date stated in the new lease.
- Record when the tenant occupied the property.
- List payments made before grant and when they were paid.
- Decide which contract or arrangement gave the landlord a right to each payment.
- Test whether the holding-over renewal exception applies.
- Consider whether an amount that is not rent is payment for the new lease instead.
Older renewal cases need extra care. HMRC says that, where the Finance Act 2006 rules do not apply, the facts decide whether pre-grant rent belongs to the old or new lease.
For example, if the rent stayed the same as under an earlier stamp duty lease, HMRC says it relates to the old lease. If it increased, the reason for the increase matters. An increase agreed as the price of getting the new lease may be a premium. Without that agreement, HMRC says it may be a lease variation instead.
Example
Priya’s old shop lease ends on 31 March. She stays in the shop while she and the landlord agree terms. On 15 May, the landlord grants a new lease of the same shop. It says that its term began on 1 April, immediately after the old lease ended.
That arrangement can meet the special renewal rule. For SDLT, the new lease can start on 1 April. Suppose Priya paid £1,000 for April and £1,000 for May while holding over. The SDLT treatment still depends on what those payments were for and whether another arrangement had already taken them into account for tax.
Now change one fact. If the new lease says it began two weeks before the old lease ended, the special rule does not fit its stated conditions. SDLT need not accept that earlier date. The parties’ document does not decide SDLT.
Why this can be difficult in practice
The paperwork may use loose language. A licence fee, interim rent, holding-over rent, and a premium can all appear in the same set of documents when the parties record occupation, negotiations, and the eventual grant under different arrangements. The underlying right to payment matters more than the heading.
- Parties may backdate a lease only to align review dates, with no right to recover earlier rent.
- An agreement for lease may have created SDLT consequences before the formal lease arrived.
- A tenant may have stayed after expiry without a clear written arrangement.
- A higher rent may reflect a deal for the new lease, or a change to the old one.
- Older leases need careful checking because HMRC describes different treatment for some historic arrangements.
HMRC’s manual sets out its view of these cases. It is not the law itself. The statutory wording and the actual contracts remain central.
Key takeaways
- Rent for time before grant is normally not rent for SDLT.
- A backdated holding-over renewal has a specific statutory exception.
- A payment excluded from rent may still be taxed as a premium.
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 4 para 1 — payments given for a land transaction count for tax
- FA 2003 Schedule 5 para 1A — pre-grant payments are excluded from rent
- FA 2003 Schedule 17A para 9A — backdated renewal leases for tenants holding over
- FA 2003 Schedule 17A para 13 — some rent increases count as a new 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 a payment relates to the new lease, an earlier agreement, or an earlier lease is often a question of fact and contract wording.
- The statutory material checked is current only to 17 November 2025. A transaction after that date needs a check against the current official legislation before publication or reliance.
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 its date of grant
- Any agreement for lease, licence, or holding-over agreement
- The dates of occupation, expiry, grant, and stated lease start
- A schedule showing each payment and the period it covers
- The old lease and evidence of its rent where this is a renewal
- Correspondence explaining any rent increase or backdating
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 and rent paid before a lease is granted [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 4 para 1 - payments given for a land transaction count for tax https://www.legislation.gov.uk/ukpga/2003/14/schedule/4/paragraph/1/2025-11-17 - FA 2003 Schedule 5 para 1A - pre-grant payments are excluded from rent https://www.legislation.gov.uk/ukpga/2003/14/schedule/5/paragraph/1A/2025-11-17 - FA 2003 Schedule 17A para 9A - backdated renewal leases for tenants holding over https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/9A/2025-11-17 - FA 2003 Schedule 17A para 13 - some rent increases count as a new lease https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/13/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm17110 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 a payment relates to the new lease, an earlier agreement, or an earlier lease is often a question of fact and contract wording. - The statutory material checked is current only to 17 November 2025. A transaction after that date needs a check against the current official legislation before publication or reliance. 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 and rent paid before a lease is granted
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