Stamp Duty Land Tax (SDLT) is a government tax payable on the acquisition of land and property in England and Wales. It applies to both purchases and the granting of leases.
What Does SDLT Apply To?
In the context of commercial property, SDLT is charged on the consideration of land transactions which include:
- The purchase price of the property.
- Any premium paid.
- The rent payable under a lease.
- In some cases, the market value of the property or lease, particularly in connected party transactions.
Chargeable land transactions typically involve acquiring interests such as:
- Freeholds and leaseholds
- Other legal interests
- Rights, powers, or privileges over land
How Much is SDLT on Commercial Property?
For Freehold Purchases and Lease Premiums:
SDLT on commercial freehold purchases and lease premiums is calculated using the following rates:
|
Purchase Price Bands |
SDLT Rate |
|
Up to £150,000 |
0% |
|
£150,001 – £250,000 |
2% |
|
Over £250,000 |
5% |
Example:
For a commercial freehold purchase of £300,000:
- 0% on the first £150,000 = £0
- 2% on the next £100,000 = £2,000
- 5% on the final £50,000 = £2,500
Total SDLT payable: £4,500
SDLT on Leasehold Transactions
When acquiring a new commercial lease, SDLT is payable on both:
- The lease premium (if any) – using the same bands as freehold purchases.
- The net present value (NPV) of the rent payable over the life of the lease – using the following rates:
|
NPV Bands |
SDLT Rate |
|
Up to £150,000 |
0% |
|
£150,001 – £5,000,000 |
1% |
|
Over £5,000,000 |
2% |
Example:
If you acquire a commercial lease with:
- A premium of £300,000, and
- A net present value of rent totalling £300,000:
Lease premium SDLT:
- 0% on first £150,000 = £0
- 2% on next £100,000 = £2,000
- 5% on final £50,000 = £2,500
Total: £4,500
NPV of Rent SDLT:
- 0% on first £150,000 = £0
- 1% on the next £150,000 = £1,500
Total SDLT payable: £4,500 + £1,500 = £6,000
Additional Considerations
- VAT: If VAT is payable on the premium or rent, it must be included when calculating SDLT liability.
- Assignments: Where an existing lease is assigned, SDLT is only payable on the consideration paid for the assignment.
- Connected parties: Where the transaction is between connected persons, SDLT may be calculated based on market value rather than actual consideration.
Need Help Calculating SDLT?
While HMRC provides an SDLT calculator for indicative figures, we strongly recommend seeking professional legal advice to ensure accuracy, especially in complex or high-value transactions.
Contact our Commercial Property Solicitors today for tailored advice and to ensure your SDLT obligations are correctly met.
