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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: Example

A monthly periodic tenancy is granted orally on 1 March 2005 at a rent of £600 per month.The lease is initially treated as a lease for 1 year with a net present value (NPV) of£6,956. The effective date of the transaction is the date of grant, that is 1 March 2005.No notification is required as:

  • it is for a term of less than seven years, and
  • tax is not chargeable at a rate of 1% or higher on the consideration.

The tenant remains in occupation after 28 February 2006 and the periodic tenancy continues in this fashion past 1 March 2011, with the rent still being £600 per month. On1 March 2011, the lease is treated as being for a term of 7 years from 1 March 2005. The NPV of the lease is now £44,024 and is still below the threshold.

Although the notional lease is now for a term of 7 years and is granted for chargeable consideration, it need not be notified as it is the term of the lease when granted which determines whether a lease needs to be notified, even once its notional term has been extended (refer to SDLTM12010 and SDLTM12050).