How to choose the right SDLT1 transaction code
Choosing an SDLT1 code
HMRC’s SDLT1 guidance uses F, L, A and O to describe the kind of land deal being reported. The code affects the questions you must complete, especially for leases.
- F is normally for an unrestricted freehold transfer.
- L is for a new lease and some lease changes.
- A is for other lease-related deals, including assignments.
- O covers other land rights and specified lease reductions.
Scroll down for the full analysis.
Read the original guidance here:
How to choose the right SDLT1 transaction code
Question 2 on an SDLT1 return asks what sort of land deal you have made. Although it may look like a small box, your answer controls which later questions appear.
For stamp duty, the relevant point is the interest that has actually changed: a freehold, a new lease, an existing lease, or another land right.
What this rule is about
When completing question 2, HMRC’s manual says you must select one transaction code—F, L, A or O—according to the legal effect. Only one code applies. The codes allow HMRC to sort the return and obtain extra lease details where needed.
Do not choose a code merely because an estate agent’s advert describes the property as freehold or leasehold, because the completed legal documents may show a different transaction. Read that document.
A freehold transfer can still fall into the lease-related category.
This is the part people get wrong.
What the official source says
HMRC’s manual gives four choices for question 2. It says code F will normally apply when a freehold in England or Northern Ireland, including commonhold, is transferred without the lease circumstances described elsewhere.
Use A where that freehold is subject to a lease.
- Use F for a freehold transfer that is not subject to a lease.
- Use L for a new lease, an overriding lease, or a replacement lease.
- HMRC says L also covers lease changes that increase rent.
- HMRC says A covers an assignment of an existing lease.
- Use A for a tenant giving up a lease, where payment has been given.
- Use A where a tenant buys the landlord’s freehold or leasehold reversion.
- Use O for rights such as an easement, a servitude or sporting rights.
- HMRC also places a rent reduction, or some term reductions, in O.
The law supports the need to consider the deal’s legal effect. It can treat a new interest, a surrender, and certain lease changes as land transactions.
HMRC uses its codes to request that information on the return.
What this means in practice
Code L tells HMRC that the transaction involves a new lease. The manual says you must then give lease details, including the information requested in questions 16 to 25 on a paper SDLT1.
The online service should ask the matching questions.
For code A, HMRC says to complete questions 16 to 21, but not questions 22 to 25. Assignments and surrenders differ from new leases.
- A buyer taking over an existing shop lease should start with code A.
- A landlord granting a fresh lease to a new tenant should start with code L.
- A tenant buying its landlord’s interest should start with code A.
- Someone acquiring a right of way may fall within code O.
- A straightforward freehold sale, with no lease affecting it, will normally be F under HMRC’s guidance.
You might think code O means the transaction can be ignored. It does not. You must still decide whether the transaction is notifiable and whether SDLT is due.
How to analyse it
Begin with the document that legally completes the deal, rather than the label used in emails, because it identifies the interest or right actually changing hands. Emails do not determine it.
Then work through the questions in order. This approach is slower at first, but it avoids selecting the wrong route through the return.
- What land interest or right are you receiving?
- Is it a freehold transfer with no lease affecting it?
- Is a completely new lease being granted?
- Are you taking over, giving up, or buying out an existing lease?
- Has an existing lease been varied rather than replaced?
- Did the change increase or reduce rent, shorten the term, or do something else?
- Has anyone given money or another benefit for the transaction?
- Which lease-detail questions does the selected code require?
Lease changes need special care. Under the legislation, an increase in rent is treated as a new lease only in specified circumstances.
A rent reduction and a reduction in the term have separate statutory treatment. The wording of the variation deed therefore matters.
Example
Amir pays £18,000 to take over the remaining eight years of an existing office lease from the outgoing tenant, rather than for a fresh lease granted by the landlord. No new lease is granted.
HMRC’s manual puts an assignment of an existing lease in code A, so Amir would select A and provide the lease information requested for that code.
Change one fact: the old lease ends and the landlord grants Amir a fresh eight-year lease instead. HMRC’s manual says that is code L.
The rent and any premium then need the new-lease questions.
Why this can be difficult in practice
Documents often use loose language. A deal called a “renewal” may be a new lease, an extension, or a variation. Those are not always treated alike for SDLT.
There is an important warning in the manual: it says that a code O transaction needs a return only where SDLT is chargeable at 1% or more. That is not the statutory test.
The current statutory notification test uses tax charged at more than 0%, subject to the full statutory rules. The manual is guidance, not law.
- In HMRC’s coding guidance, a freehold subject to a lease is treated differently from an unrestricted freehold transfer.
- An assignment is different from a landlord granting a new lease.
- A rent increase does not automatically have the same result in every case.
- A reduced rent does not mean there is no land transaction.
- The return code does not settle the amount of SDLT, if any.
- Older HMRC wording may not reflect later changes to the law.
Key takeaways
- Choose the code from the legal effect of the deal.
- Use HMRC’s lease questions that match the selected code.
- Check current legislation where notification or a lease variation is involved.
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 section 43 — when a land transaction includes lease changes
- FA 2003 section 48 — interests and rights in land covered by SDLT
- FA 2003 Schedule 17A para 13 — when an early rent increase counts as new lease
- FA 2003 Schedule 17A para 15A — lease changes that reduce rent or shorten term
- FA 2003 section 76 — duty to file a return for notifiable transactions
- FA 2003 section 77 — which land transactions must be notified to HMRC
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
- The supplied HMRC manual page appears not to reflect all later statutory changes to notification and lease variations.
- The correct treatment can depend on the date of the transaction, the lease wording, what changed and whether money or another benefit was given.
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 SDLT1 draft or online return questions
- the transfer, lease, deed of variation or surrender document
- details of any rent, premium or other payment
- the original lease and any earlier replacement lease
- the completion date and effective date 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 How to choose the right SDLT1 transaction code [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 section 43 - when a land transaction includes lease changes https://www.legislation.gov.uk/ukpga/2003/14/section/43/2025-11-17 - FA 2003 section 48 - interests and rights in land covered by SDLT https://www.legislation.gov.uk/ukpga/2003/14/section/48/2025-11-17 - FA 2003 Schedule 17A para 13 - when an early rent increase counts as new lease https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/13/2025-11-17 - FA 2003 Schedule 17A para 15A - lease changes that reduce rent or shorten term https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/15A/2025-11-17 - FA 2003 section 76 - duty to file a return for notifiable transactions https://www.legislation.gov.uk/ukpga/2003/14/section/76/2025-11-17 - FA 2003 section 77 - which land transactions must be notified to HMRC https://www.legislation.gov.uk/ukpga/2003/14/section/77/2025-11-17 HMRC's guidance page on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm62050 HOW I WANT YOU TO ANSWER 1. Work from the legislation above. Read it before answering. HMRC guidance is HMRC's 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 - The supplied HMRC manual page appears not to reflect all later statutory changes to notification and lease variations. - The correct treatment can depend on the date of the transaction, the lease wording, what changed and whether money or another benefit was given. 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: How to choose the right SDLT1 transaction code
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