Stamp duty land tax (SDLT) applies where a property in England or Northern Ireland is sold for valuable consideration. There are different rates for residential properties and non-residential properties. Non-residential properties include:
- commercial property;
- property that is not suitable to be lived in and cannot be made suitable (for example, where there is a high risk that the property will collapse);
- forests;
- agricultural land that is part of a working farm or used for agricultural reasons;
- any other land or property that is not part of a dwelling house or garden; and
- six or more residential properties purchased in a single transaction.
A property may comprise both residential and non-residential elements. This would be the case, for example, for a shop with a flat above it. Where a mixed-use property is purchased, it is not necessary to value the different parts and apply the residential and non-residential rates accordingly. Instead, the non-residential rates apply to the whole purchase. This can be beneficial as the non-residential rates are considerably lower. Further, there is no second-property supplement.
The residential and non-residential rates are shown in the tables below.
Residential rates
| Consideration | SDLT rate |
| Up to £125,000 | Zero |
| The next £125,000 (the portion from £125,001 to £250,000) | 2% |
| The next £675,000 (the portion from £250,001 to £925,000) | 5% |
| The next £575,000 (the portion from £925,001 to £1.5 million) | 10% |
| The remaining consideration above £1.5 million | 12% |
A supplement of 5% applies to second and subsequent homes where the consideration is £40,000 or above (other than an exchange of the main residence).
Non-residential rates
| Consideration | SDLT rate |
| Up to £150,000 | Zero |
| The next £100,000 (the portion from £150,001 to £250,000) | 2% |
| The remaining consideration above £250,000 | 5% |
Case study
Bill and Jane buy an equestrian property comprising a house, stables and paddocks of three acres from which they run their business providing riding lessons and liveries. The property cost £1.2 million. As the equine facilities are used commercially, the property is a mixed-use property and the commercial SDLT rates apply. Therefore, SDLT of £49,500 is payable.
Had they not used the equine facilities commercially, HMRC would treat the property as a residential property. Assuming that it is their main residence, the SDLT payable at the residential rates would be £63,750 – £14,250 more than for a mixed-use property costing the same.
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