Stamp duty, officially referred to as stamp duty land tax (SDLT), is a lump-sum tax that you will need to pay if you buy land or property that amounts to more than a set figure. In Scotland, this is known as land and buildings transaction tax. The rate of tax you need to pay depends on the type of property you have purchased, as well as the price of it. Most people recognise that stamp duty is a necessity for residential buildings, but do you have to pay stamp duty on commercial property?
The short answer to this question is ‘yes’ – stamp duty tax is applicable to commercial properties as well as residential buildings. You will need to pay SDLT to HMRC on leases and purchases of certain values. At the moment, the threshold is £150,000 for commercial property and land. You are expected to pay this irrespective of whether you have been transferred property for payment, you purchased a freehold property, you used the shared ownership scheme, or you have a new or existing leasehold.
For freehold transfers and sales, you will not need to pay any stamp duty if the property is worth less than £150,000. If the building is worth between £150,001 and £250,000, you are going to be expected to pay two per cent. If the building is worth more than £250,000, this percentage rises to five per cent. You may also have to pay stamp duty on some commercial leases. This depends on the terms of the lease, for example, any lease premiums payable, the amount of rent payable each year, and how long the lease is for. The best thing to do is use our stamp duty calculator to discover the amount of stamp duty you need to pay on your commercial property.
It is important to note that stamp duty can change at any moment. It is something that is constantly in discussion with the UK government. Based on history, it seems that commercial property laws range every two to five years, so this is something to keep in mind.