Stamp Duty for commercial properties.

February 15 2021 | Category: Small Business Finance

Stamp duty is something that most people will have to pay in their lifetime. For those who don’t know, Stamp Duty, or Stamp Duty Land Tax is a tax on new properties, whether they be for private or commercial use. We’ve already published a blog on Stamp Duty for private properties which can be found here, so today we will be focusing on Stamp Duty on commercial properties.

The percentage of Stamp Duty that you’ll need to pay depends on the value of the property. If the property is £150,000 or less, you won’t have to pay any Stamp Duty at all, however you will still need to send off a return, regardless of if you have any Stamp Duty to pay or not.

For any commercial property with a value between £150,001 and £250,000, you will be required to pay a 2% Stamp Duty rate. But only for any value left after the initial £150,000 is taken off. For example, if your property is worth £250,000, you would have to pay 2% of the remaining £100,000 over the initial £150,000 value. This would come to £2,000.

For any property over £250,000, you will have to pay an extra 5% Stamp Duty tax rate. As with the previous rate though, this would only apply to any value over the previous cut off point of £250,000. This means that if your property had a value of £350,000 for example, you would pay the aforementioned £2,000, plus 5% of the leftover £100,000’s worth of the value of your property. This comes out to £5,000 in this case. What this means is that for a property worth £350,00 you will be paying a total of £7,000 in Stamp Duty Land Tax.

This is a slightly more confusing system than if you were paying Stamp Duty on a private property, but as long as you know the percentages you need to pay for the value of your property, it is relatively simple to work out.

What about if you only own a leasehold property? In this situation, where you only own the property for a fixed time period, you are still required to pay Stamp Duty, the rates are slightly different, however.

You will still have to pay the above rates for commercial properties, but alongside that you will also need to pay the net present value of the annual rent. This value is 0% up to £150,000, 1% for value between £150,001 and £5,000,000, and 2% for anything higher than that. Once again, if the value of this is over £5,000,000, you will have to pay both the 1% and 2% tax rates.

If you’re looking to purchase a property for commercial purposes and are still unsure of how Stamp Duty Land Tax works, or if you need help with any aspect of setting up your business for the first time, then why not get in touch with us here at Chilvester Financial? Our business experts will be more than happy to give you just the advice you need. Contact us today for your free, no obligation-consultation!