Reverse premiums on leases and stamp duty
Reverse premiums in brief
A payment made in the right direction on a lease grant, assignment or surrender can be excluded when SDLT is worked out.
- Check the type of lease event.
- Check who paid whom.
- Check all related documents.
Scroll down for the full analysis.
Read the original guidance here:
Reverse premiums on leases and stamp duty
If a landlord pays you to take a lease, that payment may not increase your Stamp Duty Land Tax bill. People call this a reverse premium. The direction of the money matters.
What this rule is about
A lease can involve money moving either way. Usually, a tenant pays a landlord. Sometimes a landlord pays a tenant, rather than the tenant paying the landlord, when the tenant takes premises that are hard to let under a lease.
That distinction sounds small. It can change the SDLT calculation.
What the official source says
The supplied HMRC page is archived. Its only content says that SDLT stopped applying to Scottish land transactions from April 2015, when Land and Buildings Transaction Tax took over.
The page does not explain reverse premiums. Instead, the legislation directs the calculation to leave out a reverse premium when working out the amount paid for SDLT, even though the page says nothing about reverse premiums. That is the rule.
- On a new lease, it is money paid by the landlord to the tenant.
- On an assignment, it is money paid by the outgoing tenant to the incoming tenant.
- On a surrender, it is money paid by the tenant to the landlord.
What this means in practice
In practice, do not assume every sum mentioned in a lease deal adds to SDLT until you have checked who paid it and which lease event took place. Check that first.
- A payment in the stated direction may be a reverse premium.
- If it is, it is excluded from the SDLT amount.
- Rent and other payments may still need separate checks.
How to analyse it
Start with the documents rather than the label used in an email or heads of terms, then use them to identify the payment, the parties and the lease event. Do that first.
- Identify whether this is a grant, assignment or surrender.
- Identify the person making the payment.
- Identify the person receiving it.
- Check that the payment direction matches the statutory definition.
Example
Priya takes a new lease, and the landlord pays her £25,000 as an incentive to take it; if that payment is a reverse premium, exclude the £25,000 from the amount used for SDLT. This does not settle the treatment of any rent or separate payment.
Why this can be difficult in practice
In practice, lease deals can contain incentives, deposits, fit-out payments and side agreements, so you need to distinguish each payment before deciding its SDLT treatment. The parties may call a payment a premium, but its legal treatment depends on what it really is and who made it.
- Do not rely only on the payment label.
- Keep the lease and any side agreements together.
- Check whether several payments form one wider deal.
Key takeaways
- A reverse premium moves in a specified direction.
- A qualifying reverse premium is excluded for SDLT.
- The archived HMRC page does not explain the rule itself.
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 17A para 18 — reverse premiums excluded from the amount paid
Where this is not settled
- Whether a payment is a reverse premium can depend on the lease documents, the parties and why the payment was made.
- The supplied statutory text is current only to 17 November 2025. Transactions after that date need a current-law check.
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 lease, assignment or surrender document
- Any side letter or incentive agreement
- Proof of who paid whom and the amount paid
- The effective date and location of the transaction
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 Reverse premiums on leases and stamp duty [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 17A para 18 - reverse premiums excluded from the amount paid https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/18/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm18048 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 is a reverse premium can depend on the lease documents, the parties and why the payment was made. - The supplied statutory text is current only to 17 November 2025. Transactions after that date need a current-law check. 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: Reverse premiums on leases and stamp duty
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