HMRC SDLT Thresholds for Lease Extensions
In English tax law, extending a lease is legally treated as a 'surrender and re-grant' under HMRC Stamp Duty Land Tax rules.
The premium paid to the freeholder is classified as 'chargeable consideration' for the grant of a new lease:
• Main Residence (Sole Property): Standard residential SDLT bands apply. The nil-rate band covers all premiums up to £250,000. Because typical statutory lease premiums range from £3,000 to £35,000, 99% of owner-occupiers pay exactly £0.00 in Stamp Duty.
• Second Homes & Buy-to-Let Landlords: If you own another residential property anywhere in the world, the 3% Higher Rates for Additional Dwellings (HRAD) applies to any consideration above £40,000. For example, if a landlord pays a £50,000 premium to extend an investment flat's lease, SDLT is charged at 3% (£1,500).
| Lease Extension Premium | Main Residence (Sole Home) | Buy-to-Let / Second Home (3% Surcharge) |
|---|---|---|
| Under £40,000 (Typical) | £0.00 (Zero SDLT) | £0.00 (Below £40k threshold) |
| £40,001 to £125,000 | £0.00 (Within £250k nil-rate band) | 3% of full premium (e.g. £1,500 on £50k) |
| £125,001 to £250,000 | £0.00 (Within £250k nil-rate band) | 3% of full premium (e.g. £4,500 on £150k) |
| £250,001 to £925,000 | 5% on portion above £250,000 | 8% on portion above £250,000 |