Stamp duty land tax for commercial properties

Stamp Duty Land Tax (SDLT) for commercial properties is calculated differently than it is for residential purchases.

If you are looking to purchase property for your business, it is important to understand these requirements, as well as the ways in which Fiducia can help mitigate the amount of SDLT you need to pay.

What is ‘commercial property’?

For tax purposes, HMRC makes a distinction between residential and non-residential properties. Commercial property falls into the latter category, along with other business purchases such as farmland, forest areas and any property that is not being used as a place to live.

Commercial property includes shops, offices, pubs, restaurants, hotels, casinos and many other buildings from which the owner intends to provide a service to the public.

Stamp duty land tax commercial property requirements

There are five basic SDLT boundaries to consider for commercial property buyers.

If your building costs up to £150,000, the annual rent you pay will determine whether or not any SDLT is due. HMRC defines ‘annual rent’ as “the highest annual rent known to be payable in any year of the lease”.

In cases where this amount is under £1,000, you will not need to pay any Stamp Duty, whereas if it is higher than £1,000 your SDLT rate will be 1%.

The 1% SDLT also applies to commercial properties costing over £150,000 and up to £250,000. Anything over the quarter of a million mark and up to £500,000 incurs a 3% rate, while anything over this amount is in the top 4% SDLT band.

There are various exceptions to these requirements, most notably if the building is purchased by a charity or if commercial property is left behind as part of a will or estate.

Ask Fiducia about stamp duty land tax

If you are looking to purchase commercial property and want to make sure you plan ahead, call Fiducia today on 01625 599 200 or take a look at some of our Frequently Asked Questions to see how we can help you manage your SDLT payments.