Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Stamp Duty Land Tax Manual

HM Revenue & Customs
, see all updates

Miscellaneous Provisions: Linked leases: Overview

Transactions are defined (at FA03/S108) as ‘linked’ for the purposes of stamp duty land tax (SDLT) if they form:

* a single scheme, arrangement, or
* a series of transactions

between the same parties (or connected persons).

In the case of leases, the tax treatment differs depending on whether they are linked by way of a single scheme or arrangement or as a series of leases (‘successive’ linked leases). The different treatments and applications are outlined below, with further details and examples at SDLTM17045 and SDLTM17055 respectively.

Successive leases

A series of leases will often exist between the same parties, for example where a short lease is renewed between the same tenant and landlord. A renewal lease will be treated as linked with the original lease if, for example, the rent was fixed under the terms of the original lease or is stated to be the same as that payable under the original lease.

However, the renewal of a lease will not be treated as linked with the original lease at all for stamp duty land tax (SDLT) purposes if it can be shown (with appropriate evidence) to have been negotiated at arm’s length, for example if the original or earlier lease:

* expired naturally
* contained no right or compulsion of either party to renew and/ or
* was renewed following entirely new negotiations, as would apply to a new tenant.

Otherwise, where leases of the same premises are granted:

* between the same or connected parties
* to take effect one immediately after the other
* whether at the same time or not

these are successive linked leases for SDLT purposes, with tax calculated under the provisions of FA03/SCH17A/PARA5. Refer to SDLTM17040 for details.

However this treatment specifically does not apply where the original or earlier transaction:

* was executed before SDLT was implemented (pre - 1 December 2003) - refer to [SDLTM17060]( for treatment (FA03/SCH19/PARA7(4)), or
* is an agreement for lease which was substantially performed (on or after 19 July 2006) and a subsequent lease granted in pursuance of it.

These transactions may be linked but are not treated as successive, so tax is calculated where appropriate under FA03/SCH5/PARA2(5) and (6) - refer to SDLTM17050 to SDLTM17065 for details and examples.

Single scheme or arrangement

Where, as a matter of fact, leases of two or more properties are negotiated as a single bargain between the same or connected parties, the transactions will be treated as linked for SDLT purposes. If the special provisions for successive leases do not apply (see above), then tax on linked leases is calculated under FA03/SCH5/PARA2(5) and (6) and the chargeable consideration is aggregated for the purposes of applying SDLT rates and thresholds. Refer to SDLTM17050 and SDLTM17055 for details and examples.

This treatment also applies to:

* Pre-SDLT leases linked with SDLT leases (refer to [SDLTM17060]( and [SDLTM17065]( for details of calculation)
* Agreements for lease substantially performed on or after 19 July 2006 and followed by grant
* Abnormal increases of rent after fifth year treated as grant of new lease (FA03/SCH17A/PARA14)..
* Increases of rent in first five years treated as grant of new lease, ONLY where in fact the deemed lease is linked with the original (FA03/SCH17A/PARA13). Refer to [SDLTM10045]( for details and examples.

In all the above cases, ‘leases’ include transactions treated as the grant of a lease for SDLT purposes. Refer to SDLTM10045 for examples.