Written by Richard Farnworth

Calculate commercial property stamp duty

Stamp Duty Land Tax is a tax paid on the purchase of a property situated in England, Wales or Northern Ireland which is charged as a percentage of the purchase price.

Most people are aware of the need to pay stamp duty on a residential purchase of more than £125,000, however commercial property can be more complicated.

In this article, the specialist solicitors at Commercial Matters explain the current thresholds for Stamp Duty Land Tax and why getting the right legal advice is crucial.

How much will Stamp Duty Land Tax cost on a commercial property?

For commercial land and property, stamp duty will need to be paid when purchasing a commercial property over £150,000. For freehold purchases, the thresholds are:

  • 0% on the first £150,000
  • 2% on the portion between £150,001 and £250,000
  • 5% over £250,000

For example, a commercial freehold purchase worth £400,000 would have no tax applied to the first £150,000, 2% on the next £100,000 and 5% on the remaining £150,000. This would bring the total stamp duty bill to £9,500.

Stamp duty on commercial leases

Stamp duty will also be due on some commercial leases depending on the terms of the lease, including how long the lease is for and the amount of rent payable each year.

The amount of stamp duty paid is calculated on the value of rent over the lifetime of the lease. The full thresholds are:

  • 0% on the first £150,000
  • 1% on the portion between £150,001 and £5,000,000
  • 2% over £5,000,000

For example, if the value of rent over the lifetime of the lease is £400,000, no tax would be applied to the first £150,000 and 1% would be applied to the remaining £250,000 resulting in a stamp duty cost of £2,500.

Why the right legal advice is vital

Whether you are purchasing or leasing a commercial property, Stamp Duty Land Tax can be a significant cost.

By speaking to a specialist commercial property solicitor, you can receive advice on not only the stamp duty you may owe but how you can reduce this bill.

For example, entering into a long term lease could leave you facing a much higher stamp duty bill than taking out a shorter lease containing a tenant’s option to renew.

Why choose the specialists at Commercial Matters

Richard Farnworth, Director at Commercial Matters, has more than 35 years’ experience advising small and large businesses on all aspects of commercial purchases and leases.

Our Ourdedicated solicitors will be on hand to offer the advice you need every step of the way. Our goal is to develop long lasting relationships with everyone we work with so that you can always have an experienced legal expert on your side.

Talk to the specialist solicitors at Commercial Matters today

If you’d like to talk to one of our experienced solicitor about the purchase or lease of a commercial property, call us now on 01282 695 400.

Or, if you don’t have time to talk to us right now, you can arrange a call back with a member of our team by completing our online contact form here.