Lease Assignments: New Lease Treatment and Stamp Duty Land Tax Implications

When a Lease Assignment Is Treated as a New Lease for SDLT

Usually, assigning a lease is taxed only on any price paid for the assignment. However, if the lease was originally granted using certain SDLT reliefs or exemptions, the first later assignment outside those relieved conditions can be treated as if the outgoing tenant had granted a new lease. This can mean SDLT is charged on the remaining rent as well as on any capital payment.

• The rule applies only in specific cases where the original lease grant benefited from listed SDLT reliefs or exemptions, such as group relief, charities relief, sale and leaseback relief, certain public body transfers, and some seeding or alternative finance reliefs.
• If it applies, the assignment is treated as a deemed new lease for the unexpired term, using the lease terms that apply after the assignment, including rent and any review pattern.
• The assignee may face two SDLT charges: one on the rent for the remaining term and another on any premium or other capital amount paid for the assignment.
• The rule does not apply in some cases where certain reliefs have already been withdrawn because of a disqualifying event before the assignment takes effect.
• To assess the SDLT position properly, you need to check the lease’s tax history, including the original grant, any relief claimed, whether this is the first non-exempt assignment, and whether the original grant was within SDLT at all.

Scroll down for the full analysis.

When an assignment of a lease is treated as a new lease for SDLT

This page explains a special SDLT rule that can apply when a lease was originally granted with a tax relief or exemption. In some cases, the first later assignment of that lease is not taxed in the normal way. Instead, it is treated as if the assignor had granted a new lease to the assignee. That matters because the assignee may have to pay SDLT on the rent element as well as on any premium or other capital payment.

What this rule is about

Normally, assigning an existing lease is not the same as granting a new lease. In broad terms, an assignment transfers the tenant’s existing leasehold interest to a new tenant. A new grant creates a fresh lease.

For SDLT, that distinction is important. A grant of a lease can trigger SDLT on the rent, usually by reference to the net present value of the rent over the term, and also on any premium. An assignment is usually taxed only on any chargeable capital amount paid for the assignment.

The rule in Schedule 17A paragraph 11 Finance Act 2003 changes that result in a specific situation. It is designed to deal with leases that were originally granted under a relief or exemption. If the lease later leaves that protected context, the first non-exempt assignment can be taxed as if it were a fresh grant of the remaining term.

What the official source says

The official material says that where the original grant of a lease was exempt from SDLT under one of a listed set of provisions, the first assignment of that lease that is not itself exempt under one of those provisions is treated as the grant of a lease by the assignor.

The listed provisions are:

• sale and leaseback arrangements under section 57A Finance Act 2003
• group relief under Schedule 7 Part 1
• reconstruction and acquisition relief under Schedule 7 Part 2
• transfers involving public bodies under section 66
• charities relief under Schedule 8
• regulations preserving certain stamp duty exemptions under section 123(3), including SI 2003/2867
• alternative finance investment bond relief in paragraphs 6 and 8 of Part 3 of Schedule 61 Finance Act 2009
• PAIF seeding relief and COACS seeding relief in Parts 1 and 2 of Schedule 7A

Where the rule applies, the deemed grant is treated as:

• having a term equal to the unexpired term of the original lease, and
• being on the same conditions as those applying after the assignment, such as the rent and any review pattern.

The official material also states that any capital amount paid for the assignment remains chargeable in addition to any SDLT arising under this deemed-grant rule.

There is an important exception. The rule does not apply where group relief, reconstruction and acquisition relief, charities relief, PAIF seeding relief, or COACS seeding relief is withdrawn because of a disqualifying event occurring before the effective date of the assignment.

The manual also says that this provision only applies where the initial grant of the lease was, or would otherwise have been, subject to SDLT.

What this means in practice

The practical effect is that you cannot always assume an assignment of a lease is taxed only on the price paid to the outgoing tenant.

If the lease was originally granted under one of the listed SDLT reliefs or exemptions, the first later assignment that does not itself fall within one of those reliefs or exemptions may be taxed as though the outgoing tenant had granted a new lease of the remaining term.

That means the assignee may need to consider two separate SDLT charges:

• SDLT on the rent for the remaining term, calculated as for a normal lease grant, and
• SDLT on any capital amount paid for the assignment.

This is a significant departure from the usual treatment of lease assignments. It can create an SDLT filing obligation and an SDLT cost that a buyer of a lease might not expect if they only look at the assignment price.

For conveyancers and tax advisers, the history of the lease matters. It is not enough to review the assignment document alone. You need to know whether the original grant benefited from one of the specified reliefs or exemptions, and whether the current assignment is the first assignment outside those relieved conditions.

How to analyse it

A sensible way to analyse the issue is to work through the following questions.

• Was there an original grant of a lease rather than some other type of land transaction?
• Was that original grant exempt under one of the specific provisions listed in the legislation and manual?
• Was the original grant one that was, or would otherwise have been, within the SDLT regime?
• Is the current transaction an assignment of that lease?
• Is this the first assignment that is not exempt under one of the same listed provisions?
• Has any relevant relief already been withdrawn because of a disqualifying event before the assignment takes effect? If so, the deemed-grant rule may not apply.
• If the rule applies, what is the unexpired term at the date of assignment?
• What rent and lease conditions apply after the assignment, including review provisions?
• Is any capital amount being paid for the assignment? If so, that amount is considered separately in addition to the deemed grant charge.

In practical terms, this often requires checking the original lease, the SDLT position on the original grant, any relief claim made at that time, and whether there have been any earlier assignments.

Example

Illustration: A company grants a 25-year lease to another company in its group, and group relief applies on the original grant. One year later, the tenant assigns the lease to an unconnected third party. If the assignment does not itself fall within one of the listed exemptions, the assignment is treated for SDLT purposes as if the outgoing tenant had granted a new lease of the remaining 24 years to the buyer.

In that case, the buyer may need to file an SDLT return and pay SDLT by reference to the remaining rent, as for a normal grant of a lease. If the buyer also pays a capital sum to the outgoing tenant for the assignment, that capital amount is also taken into account separately.

By contrast, if the original grant did not benefit from one of the listed reliefs or exemptions and SDLT was dealt with in the normal way at that stage, a later assignment is not treated as a new lease under this rule. In that more usual case, the assignment is charged only on any chargeable capital amount paid.

Why this can be difficult in practice

The main difficulty is that the SDLT treatment of an assignment depends on the tax history of the lease, not just the legal form of the current transaction.

Several points can require careful checking:

• whether the original grant truly fell within one of the specified reliefs or exemptions
• whether the current assignment is the first non-exempt assignment
• whether a disqualifying event caused an earlier withdrawal of relief, which may switch off this particular rule
• what lease terms apply after the assignment, especially where rent review machinery or variations affect the future rent profile
• whether the original grant was one that was, or would otherwise have been, subject to SDLT at all

The official material does not attempt to resolve every factual variation. In more complicated cases, the interaction between this rule and the separate rules on withdrawal of relief can be important. The manual expressly points readers to other material on relief withdrawal for some of those cases.

Key takeaways

• An assignment of a lease can be treated as a new lease for SDLT if the original grant benefited from certain specified reliefs or exemptions.
• If the rule applies, SDLT may be due on the remaining rent as well as on any capital amount paid for the assignment.
• The tax treatment depends on the lease’s history, including the original relief claimed and whether any relief was later withdrawn before the assignment.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Lease Assignments: New Lease Treatment and Stamp Duty Land Tax Implications

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