Insights

How is tax calculated on Commercial Properties?

Stamp Duty Land Tax (SDLT) is a tax you pay when you purchase a property or land in England and Northern Ireland. It is calculated differently depending on whether the property is residential or commercial. Since you are asking about commercial property, here’s how it works:

The rates for commercial property are based on the purchase price of the property. The higher the purchase price, the higher the SDLT rate you pay on the amount above each threshold. The current SDLT rates for non-residential (commercial) property are as follows:

Up to £150,000: No SDLT (0% rate).

From £150,001 to £250,000: 2% rate on the portion of the purchase price above £150,000.

Over £250,000: 5% rate on the portion of the purchase price above £250,000.

For example, if you buy a commercial property for £300,000, your SDLT would be calculated as follows:

0% on the first £150,000 = £0

2% on the next £100,000 (£150,001 to £250,000) = £2,000

5% on the remaining £50,000 (over £250,000) = £2,500

So, the total SDLT payable would be £2,000 + £2,500 = £4,500.

Keep in mind that the rules and rates might change over time, so always refer to the latest information from the UK government website or consult a tax professional for the most up-to-date information.

*This article is not legal advice but provides a general overview. The specific details of your case will determine the best course of action.