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HMRC internal manual

Stamp Duty Land Tax Manual

HM Revenue & Customs
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Term of a lease: Leases for a fixed term: Example 2

The wording of a lease states that it is to be for a term of 25 years from and including 25 March 2005. It includes a break clause allowing the tenant to terminate (‘determine’) the lease by giving 1 month’s notice at any time after 21 March 2020.

Under the Bradshaw v Pawley principle (refer to SDLTM14015), the term of the lease is either:

  1. the contractual term specified in the lease (25 years from and including 25 March 2005) or, if shorter,
  2. the period starting on the date of grant until the end of the contractual term (24 March 2030).

The date of grant is 25 February 2005.

Contractual term under a): 25 years

Period under b): 25 February 2005 to 24 March 2030: 25 years 1 month.

As (b) is not shorter than (a), the term of the lease is taken to be 25 years.

The right of the tenant to determine the lease early is ignored for the purposes of calculating the initial charge to stamp duty land tax, under FA03/SCH17A/PARA2(a). Refer to SDLTM14080 for the tax implications of any subsequent termination.

The effective date of this lease is 25 February 2005 as this is the date it was granted. For further details and definition of the effective date, refer to SDLTM07600 to SDLTM07750.