Commercial Property
The biggest cost in most purchases is Stamp Duty. This is a tax on the price of the property and is paid to the Inland Revenue.On freehold properties the Stamp Duty rates are:
| Price | Stamp Duty Rate | |
|---|---|---|
| £120,000 or less | No Tax |
|
| £120,001 to £250,000 | 1% of the whole price | E.g. price £100,000
Stamp Duty payable £1000 |
| £250,001 to £500,000 | 3% of the whole price | E.g. price £300,000
Stamp Duty payable £9,000 |
| over £500,001 | 4% of the whole price | E.g. price £600,000
Stamp duty payable £24,000 |
Rates of Stamp Duty
For a detailed explanation directly from the Inland revenue Click Here
The way stamp duty is calculated on leases is even more complicated. If you are buying an existing lease it's treated in the same way as a freehold property. That is the price paid is all that counts. However, if you are buying a new lease, Stamp Duty is based on the Price paid and on the rent payable under the lease. When we know the terms of the lease we will let you know what the Stamp Duty will be.
Leasehold Stamp Duty
In the meantime if you want more information on how it is calculated Click Here
As you will see, Stamp Duty is a major expense. Despite that, fees are payable to other government departments as well. The Land Registry is the department which keeps records on who owns which properties. All changes of ownership and all mortgages have to be registered with the Land Registry or the transaction becomes invalid. The Land Registry fee varies depending on the price paid.
E.g. a property bought for £75000 will incur a Land Registry fee of £100 a property bought for £125,000 will incur a Land Registry fee of £200.
Land Registry Fees
For more detailed information on all Land Registry fees Click Here
The way stamp duty is calculated on leases is even more complicated. If you are buying an existing lease it's treated in the same way as a freehold property. That is the price paid is all that counts.
However, if you are buying a new lease, Stamp Duty is based on the price paid and on the rent payable under the lease. For Stamp Duty purposes the rent on commercial properties is treated as if VAT will be charged on it whether it is charged or not in reality.
Example
Shop leased for a premium of £46,000 for 21 years at an annual rent of £7,200. Stamp Duty on the premium at 1% is £460 Stamp duty on the rent is based on rent of £37,200 plus notional VAT at 17.5% (i.e. £1,260) - total rent £8,460 . Stamp Duty at 2% equals £179.20 rounded up to the nearest £5 equals £180. Total Stamp Duty £460 plus £180 equals £640
As you will see, Stamp duty on commercial properties is quite complicated. When we know the terms of the lease we will let you know what the Stamp Duty will be.
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