Stamp Duty Land Tax on Commercial Property in the United Kingdom: Rates

In more detail

The changes will affect purchases and leases of commercial properties, including mixed commercial and residential properties, with an “effective date” on or after 17^th March. Two changes have been announced.

The first change is to the way in which SDLT on the price payable on the transfer of a property or on the premium for a lease is calculated.  Currently SDLT is charged on the whole price or premium depending which rate band it falls in. The maximum rate is 4% where the price or premium exceeds £500,000. The rule will change such that SDLT will be charged at the rate applicable to the portion of the price or premium falling within each rate band as follows.

The second change is to the rates at which SDLT chargeable by reference to rent on the grant of a lease is charged.  SDLT is already charged at the rate applicable to the portion of the net present value of the rent that falls within each rate band. However, the rate bands will change. An increased top rate will be introduced where the net present value of rent exceeds £5m, as set out below.

Grandfathering where contracts have already been exchanged

Where contracts were exchanged on or before 16^th March, it will usually be possible to elect that the current SDLT rates rather than the new rates will apply.  Where contracts have been varied or assigned or there is a sub-sale on or after 17^th March, or an option or pre-emption right is exercised on or after 17^th March, the ability to elect for the current rates to apply will be restricted and specific advice should be sought.

Further questions?

Contact your usual Goodwin contact or any of the following:

Joe Conder
Partner, Real Estate Transactions
+44 (0) 20 7447 4238
jconder@goodwinlaw.com

Martin Smith
Counsel, Real Estate Transactions
+44 (0) 20 7447 4234
msmith@goodwinlaw.com

This bulletin is provided for information purposes only and does not constitute legal or tax advice.  No action should be taken or omitted based on its content without obtaining detailed legal and tax advice. We do not accept any liability for any losses incurred as a result of action taken or omitted on the basis of this bulletin.