29/10/2019

Before purchasing a commercial property (or non-residential property as it is also known) you should consider whether you will be liable to pay Stamp Duty Land Tax (SDLT) on the purchase price. SDLT is a tax on property transactions and payable to HM Revenue and Customs.

Following a purchase of a property (except in certain circumstances), an SDLT return must be submitted to HMRC and any tax due paid.

Currently, SDLT is payable on all types of commercial property with a purchase price or consideration in excess of £150,000.

The tax is calculated on the portion of the property’s value that falls into each of the following tax bands.

Band                                                                                    Rate
Up to £150,000                                                         0%
Above £150,000 and up to £250,000                2%
Above £250,000+                                                    5%

For example, if you buy a freehold property for £300,000, you will pay SDLT of £4,500 calculated as follows:
0% on the first £150,000 = £0
2% on the next £100,000 = £2,000
5% on the final £50,000 = £2,500

On the purchase of a leasehold property SDLT is payable on the purchase price of the lease (the premium) at the above rates and the net present value of any annual rent you pay over the term based on the following rates:

Band                                                                                   Rate
Up to £150,000                                                        0%
Above £150,000 and up to £5,000,000            1%
Above £5,000,000+                                               2%

To check your SDLT liability use the calculator at the Gov.UK website https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro

It is worth noting that if any VAT is payable on your purchase and/or rent, you will pay SDLT on the VAT inclusive figure.

If you would like advice about any commercial property matter, call 01782 205000 or email jan.willott@beswicks.com