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HMRC internal manual

Stamp Duty Land Tax Manual

Term of a lease: Continuation by tacit relocation

In Scotland a lease which comes to the end of its express term shall (if the requisite notice to quit or to remove is not given) continue for a maximum of a year at a time by virtue of the doctrine of tacit relocation (until either party serves the appropriate notice).

For stamp duty land tax (SDLT) purposes, continuation of the lease by tacit relocation is initially treated as an extension of the original lease by one year. Generally, any continuation of occupation after the express term of the lease has finished is dealt with similarly

Leases granted (or treated as granted) before 1 December 2003

Where the original lease was granted before 1 December 2003 and was taxable under stamp duty, although the lease is treated as being extended, there are no further stamp duty or SDLT implications solely because the term of the lease has been extended after implementation of SDLT.

There may, however, be SDLT consequences if other variations occur, for example in the amount of rent charged. See SDLTM19010

Leases granted (or treated as granted) on or after December 2003

Where the original lease was granted on or after 1 December 2003 and was taxable under SDLT, the extended lease is also taxable under these rules.

This may make a difference to the tax payable on the rental amount as the net present value of the rent will be increased by the additional year’s rent. Where there is such a tax difference, this should be notified to HM Revenue & Customs, by way of letter to the Birmingham Stamp Office (address is available @ HMRC website within the contact us pages), giving sufficient information to identify the original return, land, parties to the transaction and the additional tax due and how it has been calculated. Where the continuation by tacit relocation extends into a second or subsequent year, the same calculation should be made and notification given each year there is more tax due. Notification of these extension periods is only required when more tax is due. See SDLTM19030 for more information about treatment of such leases.