Avoiding stamp duty on commercial property is a hot topic for many property investors and businesses looking to save money. While it’s not always possible to completely sidestep this tax, there are several strategies you can use to reduce your stamp duty bill.
So, do you pay stamp duty on the sale of a commercial property?
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How do you avoid stamp duty on commercial property?
Stamp duty on commercial property can be a significant expense, but there are legal ways to minimise it. Here are some strategies to consider:
- Buy property below the threshold
The simplest way to avoid stamp duty is to purchase a commercial property valued under £150,000. No stamp duty is payable on properties up to this amount. - Opt for mixed-use properties
Mixed-use properties, which combine residential and commercial elements, often attract lower stamp duty rates than purely commercial properties. This can lead to substantial savings. - Split the purchase
If you’re buying multiple properties, consider splitting the purchase into separate transactions. This might allow you to take advantage of multiple nil-rate bands. - Claim available reliefs
Several stamp duty reliefs are available for commercial properties. These include:
- Charities relief
- Group relief for company restructures
- Sale and leaseback arrangements
- Remove fixtures and fittings. By agreeing a separate price for removable fixtures and fittings, you can reduce the property’s value for stamp duty purposes.
Do you pay stamp duty on commercial buildings?
Yes, you do pay Stamp Duty Land Tax (SDLT) on commercial buildings in the UK, subject to certain thresholds and rates. Here’s a comprehensive overview:
Stamp Duty Rates for Commercial Property:
• £0 – £150,000: 0%
• £150,001 – £250,000: 2%
• Over £250,000: 5%
Key points to note:
- Threshold: SDLT is only payable on commercial properties valued above £150,000.
- Calculation method: SDLT is calculated on a sliding scale, with different rates applying to portions of the property value.
- Property types: This applies to all non-residential properties, including offices, shops, warehouses, and agricultural land.
- Leasehold considerations: For leasehold properties, SDLT may apply to both the premium paid and the Net Present Value (NPV) of the rent.
- Mixed-use properties: Properties with both residential and commercial elements are typically treated as commercial for SDLT purposes.
- Exemptions and reliefs: Certain transactions may qualify for exemptions or reliefs, such as those involving charities or specific business transfers.
- Reporting requirement: Even if no tax is due (for properties under £150,000), you must still submit an SDLT return in most cases.
It’s important to factor in SDLT costs when budgeting for a commercial property purchase, as it can represent a significant additional expense. As a seller, you could offer to pay buyer’s stamp duty bill.
What is the stamp duty threshold for commercial property?
The stamp duty threshold for commercial property in the UK is £150,000. You’ll pay no stamp duty on properties up to this value.
How is stamp duty calculated on commercial property?
Stamp duty on commercial property is calculated using a tiered system:
| Property value | Stamp duty rate |
|---|---|
| Up to £150,000 | 0% |
| £150,001 to £250,000 | 2% |
| Over £250,000 | 5% |
For example, if you buy a commercial property for £300,000, you’ll pay:
- 0% on the first £150,000
- 2% on the next £100,000 (£2,000)
- 5% on the final £50,000 (£2,500)
Total stamp duty: £4,500
Are there any exemptions from stamp duty on commercial property?
Yes, there are some exemptions from stamp duty on commercial property:
- Charities buying property for charitable purposes
- Property transferred as part of a divorce or dissolution of a civil partnership
- Property left in a will
Can I claim stamp duty relief on a commercial property?
Several stamp duty reliefs are available for commercial properties:
- Multiple dwellings relief
- Charities relief
- Group relief for company restructures
- Acquisition relief for certain company takeovers
It’s best to consult with an accountant to determine if you’re eligible for any of these reliefs.
How can I reduce stamp duty on a commercial lease?
To reduce stamp duty on a commercial lease:
- Negotiate a shorter lease term
- Agree to a lower rent
- Include break clauses in the lease
- Consider a lease with a premium payment instead of higher rent
Remember, while these strategies can help reduce your stamp duty bill, it’s important to ensure you’re complying with all tax laws. Always consult with a qualified tax advisor or solicitor before making any decisions about property purchases or leases.
The Advantages of a Quick Commercial Property Sale
Selling your commercial property to Property Saviour offers numerous advantages. As genuine cash buyers, we can complete the purchase within 2 to 3 weeks, providing you with a swift and hassle-free transaction. You won’t have to worry about estate agency fees, and we’ll even contribute up to £1,500 towards your legal fees.
One of the most significant benefits is our ability to buy properties in any condition. Whether your commercial property needs extensive renovations or has problematic tenants, we’ll make a fair offer without judgment. This flexibility allows you to sell quickly and move on without the stress of making repairs or dealing with complex situations.
If you’re considering selling your commercial property, we encourage you to get in touch with Property Saviour. Our team of experts is ready to provide a free, confidential chat about your options and what you can expect from the sale. Request a call back and receive a free cash offer. Let us help you unlock the value of your commercial property with speed and certainty.
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- The price we’ll offer is the price that you will receive with no hidden deductions.
- Be careful with ‘cash buyers’ who require a valuation needed for a mortgage or bridging loan.
- These valuations or surveys result in delays and price reductions later on.
- We are cash buyers. There are no surveys.
- We always provide proof of funds with every formal offer issued.
We'll Pay £1,500 Towards Your Legal Fees
- No long exclusivity agreement to sign because we are the buyers.
- You are welcome to use your own solicitor.
- If you don’t have one, we can ask our solicitors for recommendations.
- We share our solicitor’s details and issue a Memorandum of Sale.
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- Our approach is transparent and ethical, which is why sellers trust us.
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- If you have another buyer, you can put us in a contracts race to see who completes first.
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