When do you have to pay Stamp Duty Land Tax upon extending your lease?

Email the Leasehold Property Team: leaseadvice@meaby.co.uk

 

Stamp duty land tax – lease extensions

A lease extension is an acquisition of a term of years in property so, generally speaking, Stamp Duty Land Tax (“SDLT”) will be payable on all lease extensions where the premium exceeds the minimum threshold of £125,000.

In the autumn statement of 2015, the Government announced that higher rates of SDLT would apply to purchases of additional residential properties where the price paid exceeds £40,000. Accordingly, SDLT may be payable on your lease extension save where the following applies:

  • the dwelling in question has been the tenant’s only or main residence for the whole of the 3 year period which precedes the date of the lease;
  • the existing lease has 21 years or more to run;
  • the tenant is beneficially entitled to 25% or more of the existing interest;
  • in the case of tenants in common, or someone who shares equally with others in an undivided share, the tenant is beneficially entitled to 25% or more of the existing interest.

For tenants extending their leases in buy to let properties, where the premium is more than 40% tenants may need to pay SDLT on their lease extension.

For companies extending leases, SDLT will always be payable on any lease extension where the premium exceeds £40,000.

Please contact leaseadvice@meaby.co.uk if you require advice in this area.