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HMRC internal manual

Stamp Duty Land Tax Manual

Miscellaneous provisions: Grant of a reversionary lease

A ‘reversionary’ lease in England is one where the term commences after the date of grant.

The effective date of a reversionary lease for stamp duty land tax purposes is the date of grant, not the date the term commences.

The variation of a Scottish lease to extend its term is treated for SDLT purposes as the grant of a new lease commencing on the day after the lease would have expired if it not been extended. The SDLT consequence of the extension of a Scottish lease are similar to the grant of a reversionary lease.

The threshold, rates of tax and exemptions to be taken into account are those prevailing at the effective date of the transaction (that is, in Scotland, the last date of execution of the new lease or of the variation. However the start date of the extension is used for the purposes of discounting rents to net present value (FA03/SCH5/PARA3). This takes account of the fact that the lease is fully effective as at the last date of execution, but that the term of the lease does not start until some point in the future.

This is in contrast to the treatment of an agreement to grant a lease in the future- see SDLTM19674.

For Scotland see also SDLTM18210 and SDLTM19030.