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HMRC internal manual

Stamp Duty Land Tax Manual

HM Revenue & Customs
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Miscellaneous provisions: Linked leases: Overview

Transactions are defined (at S108 of Finance Act 2003) as ‘linked’ for the purposes of stamp duty land tax (SDLT) if they form:

* a single scheme or 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 SDLTM19645 and SDLTM19655 respectively.

Successive linked 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.

However, the renewal of a lease will not be treated as linked with the original lease at all for 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 or will expire 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 Para 5 of Schedule 17A Finance Act 2003. See SDLTM19640 for details. The extension and variation of a lease can be successive linked leases.

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 Para 2(5) and (6) of Schedule 5 FA2003 and the chargeable consideration is aggregated for the purposes of applying SDLT rates and thresholds. See SDLTM19650 and SDLTM19655 for details and examples.

This treatment also applies to:

* Pre-SDLT leases linked with SDLT leases (see [SDLTM19660]( and [SDLTM19665]( 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 (Para 14 Sch 17A FA2003). See [SDLTM18620]( for details and examples.
* 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 (Para 13 Sch 17A FA2003). See [SDLTM17645]( for details and examples.

In all the above cases, ‘leases’ include transactions treated as the grant of a lease for SDLT purposes. See SDLTM17645 for examples.

Detailed guidance regarding the method by which linked leases are reported on a land transaction return or returns can be found in the SDLT1 Guidance Notes (HMRC website) and SDLT4 Guidance Notes (HMRC website).

External users can find the guidance at htpp:// and htpp://.