SDLT on leasehold purchases: how HMRC says the tax is worked out

HM Revenue & Customs (HMRC) has published guidance on GOV.UK about Stamp Duty Land Tax (SDLT) when buying a leasehold property. The page was last updated on 26 February 2026, when the residential thresholds and calculation examples were changed.

Where SDLT does not apply

You do not pay SDLT on purchases in Scotland from 1 April 2015 (Land and Buildings Transaction Tax applies there) or in Wales from 1 April 2018 (Land Transaction Tax applies there).

Existing leases

When you buy an existing lease from someone else (an assigned lease), the tax is usually calculated in the same way as for a freehold purchase, using the same rates and thresholds. An SDLT return must be filed if the price is £40,000 or more, even if no tax is due.

New leases

For a new lease, the tax depends on the premium (the amount paid for the lease) and on the rent.

• If the rent is nominal (for example a peppercorn rent), tax is calculated on the premium only, in the same way as on the price of a freehold property.
• If the rent is more than nominal, the net present value (NPV) of the rent over the whole term is also taken into account. HMRC notes that tax is normally due on the rent only if it is high, giving the example of £4,500 a year on a 99-year lease.

For a new residential lease, tax on the rent is added when the NPV exceeds the £125,000 threshold. The excess is taxed at 1%. In HMRC's example, an NPV of £260,000 means £135,000 is taxable, so the tax on the rent is £1,350, added to the tax on the premium. In another example, a premium of £275,000 on a new residential lease gives tax on the premium of £3,750 (0% up to £125,000, 2% on the next £125,000 and 5% on the rest). HMRC says different rates and thresholds applied to purchases made before 1 April 2025.

For non-residential property, the threshold is £150,000.

The tax return

For a new lease, a return must be filed even if no tax is due. The exceptions are a lease of 7 years or more with a premium under £40,000 and annual rent under £1,000, and a lease of less than 7 years where no SDLT is due on the premium or rent. The return is filed online, and HMRC provides a calculator for working out the NPV.

What this means for you

The guidance applies to anyone buying a leasehold home in England or Northern Ireland. That is particularly relevant to buyers of flats in blocks, where leasehold is common. Buyers in Scotland and Wales deal with different tax authorities. It is worth checking that the solicitor handling the purchase has filed the return and, if in doubt, contacting HMRC.