Contact us

Map

 01332 202660

email

background

OUR

PROCESS

GET IN TOUCH
WITH US

GET TO KNOW

US

BLOG

SHARE

SHARE

CONNECT

CONNECT

POST

POST

DISCUSS

DISCUSS

       Services

61 Friar Gate  Derby  DE1 1DJ

 

Registered to carry out audit work Association of Chartered Certified Accountants.

www.auditregister.org.uk under number 8011438

Member of the Association of Chartered Certified Accountants
Phone

01332 202660

Blog

Stamp duty land tax on non-residential properties

Adrian Mooy - Thursday, June 20, 2019

 

 
Stamp duty land tax (SDLT) is payable in England and Northern Ireland on the purchase of property over a certain price. It applies equally to residential and non-residential properties, although the rates are different. Stamp duty land tax is devolved with land and buildings transaction tax (LBTT) applying in Scotland and land transaction tax (LTT) applying in Wales.
 
Non-residential property
 
As the name suggests, non-residential property is property other than that which is used as a residence. This includes commercial property, such as shops and office, agricultural land and forests. The non-residential rates of SDLT also apply where six or more residential properties are brought in a single transaction.
 
Mixed use properties
 
The non-residential rates of SDLT also apply to mixed use properties. These are properties which have both residential and non-residential elements. An example of a mixed use property would be a shop with a flat above it.
 
Rates
 
SDLT is charged at the appropriate rate on each ‘slice’ of the consideration. No SDLT is payable where the consideration is less than £150,000, or on the first £150,000 of the consideration where it exceeds this amount.
 
The rates of SDLT applying to non-residential properties are shown in the table below. They also apply to the lease premium where the property is leasehold rather than freehold.
 
Consideration                                               SDLT rate
 
Up to £150,000                                                  Zero
The next £100,000
(i.e. the ‘slice’ from £150,001 to £250,000)       2%
Excess over £250,000                                       5%
 
Example

 

ABC Ltd buys a commercial property for £320,000. SDLT of £5,500 is payable, calculated as follows.
 
On first £150,000 @ 0%             £0
On next £100,000 @ 2%            £2,000
On remaining £70,000 @ 5%     £3,500
Total SDLT payable                    £5,500
 
New leasehold sales and transfers
 
The purchase of a new non-residential or mixed use leasehold property triggers a SDLT liability on the purchase price (the lease premium) and also on the annual rent payable under the lease (the net present value). The two elements are calculated separately and added together.
 
The lease premium element is calculated using the rates above, while the rent element is payable at the rates in the table below. No SDLT is payable on the rent if the net present value is less than £150,000.

 

Net present value of the rent       SDLT rates
 
£0 to £150,000                                 Zero
£150,001 to £5,000,000                   1%
Excess over £5,000,000                   2%
 
Existing leases

 

SDLT is only payable on the lease price where an existing lease is assigned.
 
SDLT calculator

 

HMRC have published a handy calculator on the Gov.uk website which can be used to work out the SDLT payable on a commercial transaction. It can be found at www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro.

 

Scotland and Wales

 

The rates of LBTT payable on the purchase of non-residential properties in Scotland can be found at www.revenue.scot/land-buildings-transaction-tax/guidance/calculating-tax-rates-and-bands and the rates of LTT payable on the purchase of non-residential properties in Wales can be found at https://gov.wales/land-transaction-tax-rates-and-bands.

 

Comments
Post has no comments.
Post a Comment




Captcha Image

Trackback Link
http://www.adrianmooy.com/BlogRetrieve.aspx?BlogID=13995&PostID=811310&A=Trackback
Trackbacks
Post has no trackbacks.

News