As a commercial property tenant, you can still incur Stamp Duty Land Tax on a property. Read our guide to find out every detail of Stamp Duty Land Tax and how it could affect you as a tenant.
Stamp Duty Land Tax (SDLT) is charged on property and land transactions including rents (leases) in the UK, where the value exceeds certain thresholds. In Scotland, this includes exchanges of missives of let, which are not allowed by the grant of a formal lease.
The table below shows the rates of Stamp Duty Land Tax that apply on commercial properties.
| Net present value of non-residential or mixed lease payments | SDLT Rate |
|---|---|
| Up to £150,000 | Zero |
| £150,001 to £5,000,000 | 1.00% of Exceeded Value |
| Over £5,000,000 | 2.00% of Exceeded Value |
*Contains public sector information licensed under the Open Government Licence (Updated 08 February 2017)
SDLT is not payable in the following circumstances if the total transaction does not exceed the threshold listed above.
It is worth considering is how much SDLT you will be paying when choosing a property. A small difference in the property price and the duration of the lease granted, could make a big difference to the amount of SDLT payable.
Examples:
If you lease a property and the total rental cost over the lease term is no more than £150,000 and the lease is no more than seven years in length, then you would be exempt from paying SDLT. Whereas in the case of a property with a lease value of £170,000 for the same lease duration, you would be responsible for paying 1 percent of the exceeded lease value (£20,000), which equals to £200. This £20,000 difference in the property net present value could result in £200 difference in the amount of SDLT payable.
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