Grant of Reversionary Lease: SDLT Changes for Scotland from April 2015

SDLT and Reversionary Leases

A reversionary lease is a lease granted now but starting at a later date, often after an existing lease or occupation ends. For SDLT, this matters because the grant date, the start of the lease term, and the start of occupation may all be different, which can affect how the transaction is taxed and which tax regime applies.

• A reversionary lease does not begin immediately; its term starts in the future.
• For SDLT purposes, it is important to identify when the lease is legally granted and when the term actually begins.
• You should check whether there is already a lease, tenancy, licence, or other occupation arrangement in place.
• The timing of any premium and when rent becomes payable can affect the tax analysis.
• For property in Scotland, SDLT generally stopped applying from April 2015, when LBTT became the usual regime instead.

Scroll down for the full analysis.

SDLT and the grant of a reversionary lease

This page explains what a reversionary lease is for Stamp Duty Land Tax purposes and why it matters. The source material is very brief, but the key point is that it deals with leases that do not begin straight away. That timing can affect how the transaction is identified and when SDLT consequences arise.

What this rule is about

A lease is usually granted to start immediately or very soon after completion. A reversionary lease is different. It is a lease granted now, but its term starts in the future, usually after an existing lease or occupation arrangement ends.

In SDLT, timing matters. SDLT is charged on land transactions, and a lease is one type of chargeable transaction. If a lease starts at a later date, you need to be clear about what has been granted, when the effective transaction takes place, and how the lease fits into the wider SDLT rules on leases.

The archived source sits within HMRC’s miscellaneous SDLT provisions and identifies the grant of a reversionary lease as a distinct topic. It also notes that, from April 2015, SDLT no longer applies to land transactions in Scotland.

What the official source says

The official page is titled “Miscellaneous provisions: Grant of a reversionary lease”. The page as provided does not contain substantive guidance beyond the title and the archive notice for Scotland. The clear implication is that HMRC treated the grant of a reversionary lease as a recognised SDLT issue within its lease rules.

The archive notice matters because SDLT ceased to apply to land transactions in Scotland from April 2015. From that point, Scottish transactions generally moved into the Land and Buildings Transaction Tax regime instead.

What this means in practice

If you are dealing with a lease that begins in the future, do not assume it can be analysed in exactly the same way as a lease that starts immediately. The fact that the lease is reversionary may affect:

• how the transaction is described in the contract and lease documents
• when the lease term is treated as beginning
• whether there is already an existing lease or tenancy in place
• how the rent and any premium relate to the future term
• which tax regime applies, especially for Scottish property after April 2015

For England and Northern Ireland, SDLT remains the relevant regime for land transactions unless another jurisdiction’s tax applies. For Scotland, the first question is whether the transaction falls before or after the change to LBTT in April 2015.

How to analyse it

When looking at a possible reversionary lease, a sensible approach is to ask:

• Has a lease actually been granted now, even though occupation or the term starts later?
• What event will trigger the start of the lease term?
• Is there an existing lease, tenancy, licence, or other occupation arrangement that the new lease will follow?
• Is any premium being paid now, and if so, what is it paid for?
• When does rent become payable under the future lease?
• Which jurisdiction is involved: England, Northern Ireland, Wales, or Scotland?
• If the property is in Scotland, does SDLT apply at all, or does LBTT apply because of the post-April 2015 change?

You also need to distinguish between the legal grant of the lease and the practical start of occupation. Those are not always the same thing.

Example

Illustration: A landlord grants a tenant a lease in June, but the lease term is stated to begin the following January, after another tenant’s lease ends. That is the kind of arrangement usually described as reversionary. The tax analysis should focus on the fact that a lease has been granted now, but its term is deferred. You would then need to work through the SDLT lease rules by reference to the actual legal terms and the applicable jurisdiction.

Why this can be difficult in practice

Reversionary leases can be awkward because the legal grant date, the start of the term, and the start of occupation may all be different. Documents are not always drafted clearly on those points.

Another difficulty is that the source material provided here is only a heading and archive note, not a full statement of HMRC’s reasoning. That means the existence of the topic is clear, but the detailed treatment must be derived from the underlying SDLT lease framework rather than from this page alone.

Jurisdiction can also create confusion. Older SDLT material may still be found online for Scottish property, but for transactions from April 2015 onwards the relevant tax is generally LBTT, not SDLT.

Key takeaways

• A reversionary lease is a lease granted now that starts in the future.
• The timing of the grant and the start of the term can affect SDLT analysis.
• For Scottish land transactions from April 2015 onwards, SDLT generally no longer applies and LBTT must be considered instead.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Grant of Reversionary Lease: SDLT Changes for Scotland from April 2015

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