Stamp duty and commercial property purchases

When buying a freehold commercial property (whether as an individual or a limited company) for example shops or offices, Stamp Duty Land Tax (SDLT) may be payable and it is calculated on the purchase price of the property, starting with properties costing £150,000 or more.

It is also payable on mixed properties that have both residential and non-residential elements, for example a flat connected to a shop, doctor’s surgery or office.

The amount of SDLT you pay on a commercial property is calculated as follows:

Up to £150,000 0%
£150,001 – £250,0002%
Anything above £250,0005%

When you buy a new non-residential or mixed leasehold property, you pay SDLT on the purchase price of the lease and the value of the annual rent you pay.

If you buy an existing lease, you only pay SDLT on the lease price but you do not pay it on the rent if the Net Present Value is less than £150,000.

You can calculate the amount of STLD you need to pay when buying a commercial property at https://www.gov.uk/stamp-duty-land-tax/nonresidential-and-mixed-rates

There are different rules for charities who may receive relief on SDLT if two conditions are met:

  • The land or property must be held for a qualifying charitable purpose either used by the charity purchasing it or another charity and;
  • if it is being bought as an investment, profits derived from the use of the land and or property are applied to the charitable purposes of the purchaser.

The SDLT return must be made to HMRC within the specified time period which is currently 14 days.

Charity Trustees entering into a land / property transaction need to ensure they comply with the terms of the charity constitution as well as the statutory requirements set out in the Charities Act 2011.

Registered social landlords can also qualify for an exemption from SDLT subject to conditions being met, but this cannot be claimed retrospectively.

Our commercial team are on hand to guide you and your organisation through the sale and purchase of commercial property.

Marianne Webb is a partner at Gullands Solicitors m.webb@gullands.com