Published: Wed, 10 Apr 2019
investment tax

Stamp Duty on Commercial Property

Stamp Duty and Land Tax (SDLT) on non-residential and mixed-use land and property is paid in increasing amounts dependant on the escalation of property price. SDLT starts on property prices in excess of £150,000, although SDLT returns should be completed on most transactions, irrespective of the consideration value.

Non-residential properties include:

  • Retail premises
  • Land
  • Forestry - Industrial 
  • Any land or premises not used or intended for residential purposes
  • Or more than 5 residential properties bought in a single transaction.

How to calculate Stamp Duty and Land Tax

Freehold sales and transfers

Property or lease premium valuationSDLT percentage
Up to £150,0000%
£150,001 to £250,0002%
Anything above £250,0015%

For example:

A freehold mixed-use premise is purchased for £300,000

  • First £150,000 at 0% = £0
  • Next £100,000 at 2% = £2,000
  • Last £50,00 at 5% = £2,500
  • Total SDLT due = £4,500

Transfers and new leasehold sales

If you buy a new commercial or mixed-use leasehold, you must pay the stamp duty on a combination of:

  • The purchase price of the lease premium (price of lease purchased) using the same calculations as if it were a freehold (as above)
  • The total value of the agreed annual rent, the ‘net present value’ which can be calculated using the table below
  • Calculate both figures separately and add them together to give you the SDLT figure owing.

Net present valueSDLT percentage
Up to £150,0000%
Between £150,001 and £5,000,0001%
Anything above £5,000,0012%

If you take over an existing or assigned lease the SDLT is only calculated on the lease price.

The net present value (NPV) is based upon the rent over the entire lease period. Should the NPV fall below £150,00 then no SDLT is due.

Current rates apply for transactions after March 17th, 2016. If contracts were exchanged before this date, then different rates of SDLT will apply.

When you have calculated the correct rates, enter this onto your SDLT return and submit to HMRC.

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