Tenants liable to pay Stamp Duty?

This is pretty interesting. Something that may actually be an issue for me in the future.

Could I get a clarification however.

In the details above, it mentions that the SDLT is calculated to a maximum of 7 years. Does this mean that no matter how long I stay in one place, only 7 years worth of rent will be used to determine if I would be responsible for SDLT, or would they take the amount paid over the entire length of the tenancy, but only ask for SDLT covering 7 years worth of rent?

Bit of a non story really....the amount of tenants renting the same place for 7 years must be small.

This will however, just encourage them to find somewhere else.....with the landlord probably losing a decent tenant.

The calculation is not "a complicated formula which maybe the HMRC is only capable of understanding". It is a simple Net Present Value calculation and can be done in Excel. The discount rate is 3.5%.
Put the following into Excel with the 3.50% in Cell B1 and the first yearly rental figure (£36,00 in my example) in Cell B3. The formula is =NPV(B1,B3:B7)
Rate 3.50%
Year 1 £36,000
Year 2 £36,000
Year 3 £36,000
Year 4 £36,000
Year 5 £36,000
NPV = £162,542

Dear All,
I guess this is calculated on the term within the document. So a normal 6 month or 12 month residential AST followed by many years of a periodic tenancy would not attract the tax.

Why on residential tenancies would you wish to grant a longer and taxable period?

According to HMRC's website: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm17035
"A series of leases will often exist between the same parties, for example where a short lease is renewed between the same tenant and landlord. A renewal lease will be treated as linked with the original lease if, for example, the rent was fixed under the terms of the original lease or is stated to be the same as that payable under the original lease.
However, the renewal of a lease will not be treated as linked with the original lease at all for SDLT purposes if it can be shown (with appropriate evidence) to have been negotiated at arm’s length, for example if the original or earlier lease:
expired naturally
contained no right or compulsion of either party to renew and/ or
was renewed following entirely new negotiations, as would apply to a new tenant."
It is unlikely that residential leases would be granted for sufficiently long to worry about SDLT and also it is unlikely the parties would NOT be free to negotiate new terms on the expiry of the first lease,

This does seem a bit of a non story. How do HMRC find out and is it worth their time and effort to try and find out? Is it the tenants duty to notify or enquire with HMRC on a regular basis that as they have been renting the same place for many years could they possibly be liable for this 1% SDLT charge? I would be surprised if this often happens. The penalty for non compliance is £100. I think most tenants will continue in blissful ignorance and in a worst case scenario pay a £100 fine. Remember this is a fine on tenants so it is much cheaper than the fines on landlords which can run into thousands!

mostly applies to commercial leases? and usual exemption of £125000?

I dont think its a non-story, I think its just something that has come more to the fore as rents have increased. £125k over 7 years is just over £1488 a month, which is a two bed flat in outer London, and as has been said, this would include replacement tenancies and periodic tenancies that follow on.

Reply to the comment left by David at 09/12/2020 - 17:28
Hi David - but as I said, how is HMRC going to find out and is the tenant going to be bothered anyway?

The usual form of AST currently in use is for a fixed period with provision for it to continue as a contractual periodic tenancy indefinitely if the tenant remains in occupation after the initial term. This seems to fall within the definition of an "indefinite term lease" - see https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm14045 and this may also apply to agreements which become statutory periodic tenancies (I think it does but can't be sure!).
"All leases for an indefinite term are treated initially for the purposes of SDLT as being for a fixed term of one year" - see https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm14050 - and if they continue beyond one year their treatment is specified at https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm14070 which says that at each anniversary it is regarded as extended for a further notional period of one year.
As far as I can make out, notification is required once the NPV from the date of the original grant to the end of the current new period crosses the threshold that applied originally so older tenancies continuing from before March 2005, when the zero band was £60,000 could easily now have crossed the line and become chargeable. I take it that SDLT would be payable on the whole of the NPV as for many years it was payable on the whole consideration, not just the bit that exceeded the threshold.
The final paragraph of sdltm14070 is "Note that a lease for an indefinite term will not come within the notification requirements merely because its notional term has been extended to seven years or more, as notification is only required when the lease, when granted, is for a term of seven years or more and the grant is for chargeable consideration. Refer toFA03/S77(2)(a)."