Leases Continuing by Tacit Relocation After Initial Fixed Term

SDLT and Scottish leases continuing by tacit relocation

This archived HMRC guidance covers a narrow point about older Scottish leases and Stamp Duty Land Tax. It explains that when a lease in Scotland continues automatically after its fixed term ends under the Scots law doctrine of tacit relocation, the tax treatment may depend on whether that continued occupation is treated as part of the original lease or as a new arrangement. SDLT no longer applies to Scottish land transactions from April 2015, when LBTT replaced it.

• Tacit relocation means a Scottish lease may continue automatically on the same terms if neither party properly ends it at the fixed term expiry.
• This guidance is historical only and is relevant mainly to Scottish land transactions before April 2015, when SDLT could still apply.
• The first step is to check the date, because post-April 2015 Scottish transactions are generally dealt with under LBTT, not SDLT.
• For older leases, you need to consider whether the tenant’s continued occupation was a true continuation under Scots law or a fresh agreement with separate tax consequences.
• Key facts include whether notice to terminate was served, whether the fixed term expired, and whether the parties carried on under the same terms.
• The archived source identifies the issue but does not give the full SDLT answer, so firm conclusions should not be drawn from it alone.

Scroll down for the full analysis.

SDLT and Scottish leases that continue by tacit relocation after the fixed term

This page explains a narrow but important point about old Scottish lease rules for Stamp Duty Land Tax. It deals with what happens when a Scottish lease does not end at the close of its original fixed term, but instead continues automatically under the doctrine of tacit relocation. This matters because, for SDLT purposes, the tax treatment of a lease can depend on whether that continued occupation is treated as part of the existing lease or as something new.

What this rule is about

Tacit relocation is a concept from Scots law. Broadly, if neither landlord nor tenant takes the necessary steps to end a lease at the expiry of its fixed term, the lease may continue automatically on the same terms for a further period.

The archived HMRC page is addressing how that kind of continuation fitted into the SDLT rules that used to apply in Scotland. The page also makes clear that this is now historical material. From April 2015, SDLT stopped applying to land transactions in Scotland and was replaced by Land and Buildings Transaction Tax.

What the official source says

The official source is very limited. Its key point is that it concerns leases which continue by tacit relocation after their initial fixed term, and that the page is archived because SDLT no longer applies to Scottish land transactions from April 2015 onwards.

So the source does two things:

• it identifies tacit relocation as the legal issue being discussed for Scottish leases; and
• it places the material in its proper historical context, namely pre-LBTT SDLT treatment.

What this means in practice

If you are looking at a Scottish lease and asking about SDLT, the first practical question is the date. If the transaction is from April 2015 onwards, SDLT is generally not the relevant tax for Scottish land transactions. The relevant regime is usually LBTT instead.

If you are looking at an older Scottish lease, tacit relocation may matter because the lease did not simply end when the original contractual term expired. Under Scots law, the tenant may have remained in occupation and the lease may have continued automatically.

For tax analysis, that raises an important practical issue: is the continued period merely an extension of the original lease relationship under Scots law, or is there some fresh arrangement that has its own tax consequences? The archived source flags the issue but does not set out the full answer in the text provided here.

How to analyse it

If you are dealing with an older Scottish lease and possible SDLT consequences, a sensible framework is:

• Identify the tax regime first. Is this a pre-April 2015 Scottish transaction where SDLT could still apply?
• Check whether the lease had an initial fixed term and whether that term expired.
• Ask what happened at expiry. Did the tenant simply remain and did the lease continue automatically under Scots law?
• Review whether proper notice to terminate was given. Tacit relocation usually depends on the absence of effective steps to end the lease.
• Check whether the continued occupation was on the same terms, or whether the parties agreed changes that may point to a new bargain rather than mere continuation.
• Keep separate the property law question and the tax question. The property law characterisation under Scots law is highly relevant, but the tax consequences still need to be tested against the SDLT rules that applied at the time.

The source provided here does not itself set out the detailed SDLT consequences, so care is needed not to assume more than the archived page actually says.

Example

Illustration: a tenant in Scotland took a lease for a fixed term ending before April 2015. When the term ended, neither side served the necessary notice to bring the lease to an end, and the tenant stayed in occupation paying rent. Under Scots law, the lease may have continued by tacit relocation. In that situation, the SDLT analysis would need to consider whether the continued period was treated as a continuation of the existing lease arrangement for tax purposes, rather than assuming that the lease simply ended on its original expiry date.

Why this can be difficult in practice

The main difficulty is that tacit relocation is a Scots law doctrine, while SDLT was a UK tax applied through its own statutory framework. The legal character of the continued occupation under property law is crucial, but tax consequences do not always follow from labels alone.

Another difficulty is that the source material here is only a heading and an archival note. It identifies the subject, but not the detailed rule. That means a reader should be careful not to draw firm conclusions from this page alone about filing obligations, further tax charges, or the exact treatment of the extended period.

There is also a timing issue. Because SDLT ceased to apply to Scottish land transactions from April 2015, it is easy to confuse older SDLT treatment with the later LBTT regime. The correct answer may depend heavily on when the lease was granted, when the fixed term ended, and whether the continuation happened before or after the change in tax system.

Key takeaways

• Tacit relocation is the Scots law rule under which a lease can continue automatically after its fixed term ends.
• The HMRC material provided here is historical only, because SDLT stopped applying to Scottish land transactions from April 2015.
• For older Scottish leases, the tax analysis depends on the dates and on whether the post-expiry occupation was true tacit relocation or some new arrangement.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Leases Continuing by Tacit Relocation After Initial Fixed Term

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