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HMRC internal manual

Stamp Duty Land Tax Manual

Term of a lease: Leases for a fixed term: Definition

For the purposes of SDLT, a lease for a definite or fixed term is one whose term can be ascertained at the time of grant (either from the wording of the lease itself or from some ancillary document such as an agreement for lease or certificate of practical completion). This includes a lease worded so that it ends on a specific date or one where the term is a specific length of time from the date of grant.

The term of a lease for a fixed term is taken to be:

  • the contractual (or ‘express’) term specified in the lease or, if shorter,
  • the period from and including the date of the grant of the lease until the end of the contractual term

This is following the decision in the case of Bradshaw v Pawley [1980] 1 W.L.R. 10.

Any contingency which would cause a lease to terminate before the end of the contractual term or any right of any party to terminate or renew the lease is ignored for the purposes of ascertaining the term for calculating the initial charge to SDLT. Refer to FA03/SCH17A/PARA2.

For details of the tax implications of the subsequent termination or renewal of a lease, refer to SDLT14055 and SDLTM14080 to SDLTM14120.

Case law has established that a term running from a date excludes that date (refer to for example Whelton Sinclair v Hyland [1992] 2EGLR 158). Thus a lease with a term of 10 years from 25 March 2006 begins on 26 March 2006 and ends on 25 March 2016. A lease with a term of 10 years from and including 25 March 2006 begins on 25 March 2006 and ends on 24 March 2016. For clarity, all examples in this chapter will have commencement dates ‘from and including’.

The normal rule in England and Northern Ireland is that the term of a lease cannot commence earlier than the date it is granted. However where a renewal lease (granted on or after 19 July 2006) is backdated, this rule is disapplied for SDLT purposes under FA03/SCH17A/PARA9A.

Refer to SDLTM14020 to SDLTM14030 for examples.