Guidance for Completing SDLT Forms: Transaction Descriptions and Codes Explained

Choosing the correct SDLT1 transaction code: F, L, A or O

On form SDLT1, question 2 asks for a transaction code that reflects the legal nature of the land transaction. The correct code is important because it decides whether the lease sections of the return must be completed. Broadly, code F is for freehold transfers, L is for the grant of a new lease, A is for other transactions involving a lease, and O is for other land interests that do not fit the first three categories.

• Use F for a transfer of freehold ownership in England or Northern Ireland, including legal, equitable and commonhold interests, unless the freehold is subject to a lease, in which case code A is used instead.
• Use L for the grant of a new lease, including overriding leases, replacement leases and some lease variations treated as a new lease, such as increases in rent or a surrender and re-grant by operation of law.
• Use A for other lease-related transactions that are not new leases, such as assignment of an existing lease, surrender by a tenant, transfer of a freehold subject to leases, or a tenant buying the reversion.
• Use O for other land interests outside F, L and A, such as easements, sporting rights, and some lease variations that reduce rights, for example a reduction in rent or term.
• The code chosen affects the rest of the return: code L requires questions 16 to 25, code A requires questions 16 to 21 only, and code O means questions 16 to 25 are left blank.
• Do not rely only on the document label. The key is the transaction’s legal effect for SDLT purposes, especially where leases or lease variations are involved.

Scroll down for the full analysis.

How to choose the right SDLT transaction code on form SDLT1: F, L, A or O

This page explains question 2 on the SDLT1 return. That question asks you to describe the transaction using one of four codes: F, L, A or O. The choice matters because it affects which other parts of the return must be completed, especially the lease questions. The HMRC material is short, but the real issue is working out what type of land transaction you are actually reporting.

What this rule is about

Question 2 on SDLT1 is not just an administrative label. It is HMRC’s way of sorting land transactions into broad categories. In practice, the code tells HMRC whether the transaction is:

• a transfer of freehold ownership,
• the grant of a new lease,
• some other transaction involving a lease, or
• another type of land interest altogether.

The main practical consequence is whether the lease sections of the return must be completed, and if so, which parts. A wrong code can lead to an incomplete or misleading return.

What the official source says

The HMRC manual says question 2 must be answered with one of four options.

Code F: Conveyance or transfer

Code F is used in England and Northern Ireland for every transfer of a freehold, whether the interest transferred is legal or equitable, and including commonhold.

But there is an important exception. If the freehold being transferred is subject to a lease, HMRC says code A applies instead, not F.

Code L: Grant of lease

Code L is for the grant of a new lease. HMRC says this includes:

• an overriding lease,
• a replacement lease where an earlier lease has expired or otherwise ended, and
• most lease variations that are treated as equivalent to the grant of a new lease.

The manual specifically includes:

• variations that increase the rent, and
• in England and Northern Ireland, so-called variations that amount to a surrender and re-grant by operation of law.

HMRC also says code L covers all cases where tax is chargeable on the rental or premium element of a new lease. If code L is used, the lease questions at 16 to 25 on the paper SDLT1 must be completed.

Code A: Any other transaction where there is a lease involved

Code A is a broad category for transactions involving a lease that are not themselves the grant of a new lease. HMRC gives these examples:

• assignment or assignation of an existing lease,
• transfer of a freehold that is subject to a lease or leases,
• surrender or renunciation of a lease by a tenant,
• acquisition by a tenant of the freehold or leasehold reversion.

For code A, further lease information must be given. HMRC says questions 16 to 21 must be completed, but questions 22 to 25 should not be completed.

Code O: Other

Code O is the residual category. It covers acquisitions of interests that do not fall within F, L or A. HMRC’s examples include:

• acquisition of an easement or servitude,
• acquisition of sporting rights,
• a lease variation reducing the rent payable,
• a lease variation reducing the term, where a return is required from the lessor.

For code O, HMRC says only the SDLT1 itself is needed, and questions 16 to 25 should be left blank. The manual also says notification is needed for these transactions only if SDLT is chargeable at 1% or more.

What this means in practice

The first question is not “what document was signed?” but “what kind of land transaction is this for SDLT purposes?”

For example, a document described as a “variation” of a lease is not automatically code O. If the variation is treated as equivalent to granting a new lease, HMRC says it belongs under code L. By contrast, if the variation simply reduces the rent, the manual places it under code O.

Similarly, if a freehold changes hands, you might assume code F always applies. It does not. If that freehold is subject to a lease, the manual directs you to code A.

So the practical task is to identify the legal effect of the transaction, especially where leases are involved.

How to analyse it

A sensible way to approach question 2 is to work through the transaction in stages.

1. Is this a transfer of freehold ownership?

If yes, code F is the starting point.

Then ask: is the freehold subject to a lease or leases? If it is, HMRC says use code A instead.

2. Is this the grant of a new lease?

If yes, use code L. This includes not only a straightforward new lease, but also:

• an overriding lease,
• a replacement lease after an earlier lease has ended,
• certain lease variations that are treated as equivalent to a new lease.

If code L applies, the fuller lease section of the return must be completed.

3. If there is a lease involved, but it is not a new lease, is it within code A?

Common examples are an assignment of an existing lease, a tenant surrendering a lease, or a tenant buying the reversion. This is also where HMRC places a freehold transfer subject to leases.

If code A applies, you complete only part of the lease section: questions 16 to 21.

4. If it is not within F, L or A, is it another acquisition of a land interest?

If so, code O may apply. HMRC’s examples show that this category includes rights over land and some lease variations that reduce rights rather than create or enlarge them.

5. Check the lease questions carefully

The code chosen determines what extra information is required:

• Code L: complete questions 16 to 25.
• Code A: complete questions 16 to 21 only.
• Code O: leave questions 16 to 25 blank.

This is one of the main reasons the classification matters.

Example

Illustration 1: A buyer acquires a freehold office building, but the building is already let to tenants under existing leases. Even though the buyer is acquiring the freehold, HMRC’s guidance says this is code A, because the freehold is subject to leases.

Illustration 2: A tenant and landlord agree to change a lease so that the rent increases. HMRC says variations increasing rent are treated as transactions equivalent to the grant of a new lease, so code L is used.

Illustration 3: A lease is varied to reduce the rent. HMRC places that under code O, not code L.

Why this can be difficult in practice

The difficult cases are usually not the obvious freehold transfer or the obvious new lease. They are transactions that sit around the edges of lease law.

In particular:

• A lease variation can fall into different categories depending on its legal effect.
• A transaction may involve both a freehold and lease interests, so the existence of a lease changes the code that would otherwise seem natural.
• The manual uses SDLT concepts such as surrender and re-grant, which depend on legal substance rather than labels used by the parties.

The HMRC material is guidance on how to complete the form. It does not replace the underlying legal analysis of what transaction has taken place. Where the legal effect is uncertain, the coding exercise becomes uncertain too.

There is also a point to handle carefully in relation to code O. The manual says that for transactions in code O, notification is needed only if SDLT is chargeable at 1% or more. That statement reflects HMRC’s form-completion guidance, but its application in any particular case depends on the wider SDLT filing rules in force for the transaction.

Key takeaways

• Choose the SDLT1 code by identifying the legal nature of the transaction, not just the document title.
• If a lease is involved, the case may fall under L or A rather than the more obvious F.
• The code matters because it determines which lease questions on the return must be completed.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guidance for Completing SDLT Forms: Transaction Descriptions and Codes Explained

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