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HMRC internal manual

Stamp Duty Land Tax Manual

HM Revenue & Customs
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Treatment of continuing indefinite term leases

Where indefinite term leases continue after their notional initial term of one year (referto SDLTM14050), their treatment for stamp duty land tax(SDLT) purposes is similar to that of continuing fixed term leases: underFA03/SCH17A/PARA4, they are treated as a lease for a term of two years from the date ofgrant (or deemed grant), being one year longer than the initial notional term.

Where SDLT was chargeable on the initial 12-month lease, the total net present value (NPV)of rents will increase with the extension of the notional term so that a revised returnwill be required.

Where no SDLT was initially chargeable, the extended term may bring the total NPV withincharge so that notification should be made using form SDLT1 and (where appropriate) formsSDLT 2, 3 and 4. This should be made by letter to The Compliance Team, BirminghamStamp Office within 30 days of the day after expiry of the notional first 12-monthterm.

If the lease continues after the two-year term has expired, it is then treated as anotional lease for three years from the date of grant (or deemed grant), with notificationor revised return (if required) as before.

If the lease continues after the three-year term has expired, it is treated as a notionallease for four years from date of grant (or deemed grant) and so on, until the lease isdetermined or a new lease is granted.

Note that a lease for an indefinite term will not come within the notificationrequirements merely because its notional term has been extended to seven years or more, asnotification is only required when the lease, when granted, isfor a term of seven years or more and the grant is for chargeable consideration. Refer toFA03/S77(2)(a).