Does Stamp Duty apply to Lease Extensions?
Stamp Duty Land Tax (SDLT) is payable on lease extensions provided that the premium is greater than £40,000 and the annual ground rent is less than £1,000 per annum.
How much Stamp Duty do I need to pay?
The normal rates of stamp duty apply. The rate depends on whether you reside in the property (as your Principal Private Residence), or not.
If the property is your home
| Rate | Charge Band |
|---|---|
| 0% | Up to £125,000 |
| 2% | Over £125,000 to £250,000 |
| 5% | Over £250,000 to £925,000. |
| 10% | Over £925,000 to £1,500,000. |
| 12% | Over £1,500,000 |
Higher Rate Stamp Duty (rented property)
Properties that are not your Principal Private Residence are subject to a higher rate of Stamp Duty. This could be either a second home or a buy-to-let proeprty. They attract an additional 3% SDLT as shown below:
| Rate | Charge Band |
|---|---|
| 3% | Up to £125,000 |
| 5% | Over £125,000 to £250,000 |
| 8% | Over £250,000 to £925,000. |
| 13% | Over £925,000 to £1,500,000. |
| 15% | Over £1,500,000 |
Example 1 - Principal Private Residence
You have agreed to extend your residential lease by a further 90 years at a premium of £50,000. The property is your principal private residence. No Stamp Duty will by payable.
Example 2 - Buy to Let
You have agreed to extend your residential lease by a further 90 years at a premium of £50,000. The property is rented or vacant. Stamp Duty will by payable at a rate of 3% equating to £1,500. If the premium had been less than £40,001 then no Stamp Duty would have been payable.
