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HMRC internal manual

Stamp Duty Land Tax Manual

Term of a lease: Leases for an indefinite term: Definition

For the purposes of stamp duty land tax (SDLT), a lease for an indefinite term is anylease where the term of the lease cannot be solely ascertained from thewording of the lease or some other ancillary document (such as an agreement for lease or acertificate of practical completion) at the date of grant of the lease, for example wherethe end date depends on notice being given or on operation of law.

For the tax treatment of leases for an indefinite term refer to SDLTM14050.

The commonest example of a lease for an indefinite term is a periodic tenancy.A particular feature of periodic tenancies is that, unless notice to terminate the tenancyis given, the tenancy continues from period to period. A periodic tenancy can be eitherexplicit or implicit, the difference being that for an explicit periodic tenancy theperiod is stated in the lease or tenancy agreement, whereas for an implicit periodictenancy the period is taken to be the same as the frequency of the rental period.

As termination of the lease depends on a notice being given, the term cannot beascertained at the date of grant so these leases are treated as being for an indefiniteterm for SDLT purposes.

The fact that notice has to be given to terminate a lease does not mean that it isnecessarily a lease for an indefinite term. If the term of the lease can be ascertained atthe time of grant, it will be a fixed term lease on which any right of termination will bedisregarded for SDLT purposes (refer to SDLTM14015).

Leases for life

For SDLT purposes, a lease for life is a lease for an indefinite term as the actual enddate of the lease, and thus its term, cannot be ascertained at the time of grant. This isirrespective of the fact that in England & Wales a lease for life is treated for otherpurposes as being for a term of 90 years.