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.
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
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.
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
The next £100,000
(i.e. the ‘slice’ from £150,001 to £250,000) 2%
Excess over £250,000
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%
SDLT is only payable on the lease price where an existing lease is assigned.
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
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.