7th February 2022
Stamp duty – or SDLT (stamp duty land tax), is a one-off tax payment relating to a property. The buyer of the property pays stamp duty. It is a topic usually talked about when people buy residential property, but what about commercial property? Here we look at stamp duty for commercial property, including price scales for sales and leases.
Commercial Property and SDLT
All commercial property transactions that are over the price of £150,000 will have stamp duty. This applies to sales and renting. The exact amount of stamp duty will vary between properties and depends on several things. The price of the property is the key factor. Here is a scale for commercial property purchases SDLT.
Purchases less than £150,000 – No SDLT is payable
£150,001 to £250,000 - 2%
More than £250,000 - 5%
Stamp Duty for Commercial Property Leases
Renting a commercial property will bring payable stamp duty. The amount will be worked out using various factors. Lease length, annual rent and premiums will all be considered when calculating stamp duty for commercial property leases.
Here is a general guide for commercial property lease stamp duty rates.
Value less than £150,000 – No SDLT is payable
£150,001 to £250,000 - 1%
More than £250,000 - 2%
VAT and Stamp Duty on Commercial Property
The SDLT for a property will be calculated on the complete sum payable on the purchase, including any VAT. So the calculation will be made on the total figure after VAT is added. This is important to be aware of when buying commercial property as it is double taxation.
For example, if the commercial property for purchase is £200,000 plus 20% VAT, the total price of the purchase will be £240,000. This is the sum used to calculate the amount of SDLT owed on the property.
If you are unsure about stamp duty for the type of property purchase you wish to make, the government's website has a stamp duty calculator. This can help you work out your tax liability for the investment you intend to make.
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