Stamp Duty Land Tax on Leasehold sales

You do not pay SDLT if you buy a property in:

The amount of SDLT you pay when you buy a leasehold property, depends on if it’s an existing lease (an assigned lease) or a new one.

Residential and non-residential properties are leasehold or freehold.

A developer builds some flats and sells them on 99 year leases. You buy one of the 99 year leases and sell it when it still has 88 years to run. You assign the lease to the new owner for the rest of the period.

The new owner pays a lump sum for the assignment of the lease and pays SDLT on this amount.

In most cases, use the same rates and thresholds to work out the amount of SDLT as you would if you bought a freehold property (residential or non-residential freehold).

The rules for completing the SDLT return for an assigned lease are the same as the rules for a freehold property. Complete the return if the sale price is £40,000 or more, even if no SDLT is due.

If you buy a new lease, the SDLT you pay depends on the amount of:

When you buy a new lease and pay a premium, but only a nominal rent (for example, a peppercorn rent), calculate SDLT on the amount of the premium only. This applies for both a residential or non-residential lease.

Calculate the SDLT on the premium in the same way as you would for the sale price of a freehold property. You must send an SDLT return to HMRC if the sale price is £40,000 or more, even if no SDLT is due. If the lease is for less than 7 years and no tax is due, you do not need to send a return.

New leases with more than a nominal rent

If you buy a new lease, pay a premium and more than a nominal rent, work out the SDLT on: