Do You Know Your Tax Duty?

Do You Know Your Tax Duty?

5 April 2017
Do You Know Your Tax Duty?

Stamp Duty Land Tax (SDLT) is payable on non-residential or mixed-use land or property, in tranches, over £150,000.

The freehold duty rate tranches:

Up to £150,000   = Zero
£150,001 to £250,000  = 2%
£250,000 and beyond  = 5%

E.G. tax payable on an office building bought for £1M:

0% of first £150,000  = £0
2% of next £100,000  = £2,000
5% of next £750,000  = £37,500

TOTAL SDLT   = £39,500

The rules vary for leasehold transactions as you pay SDLT on the lease purchase price and the value of annual rent payable (if under £150K then tax is not payable).  These two sums are calculated separately and added together.  One exemption to the rule is if you assign an existing lease then SDLT is only payable on the sum paid for the lease.

The tax tranches payable on the annual rent payable are:

£0 - £150,000   = Zero
£150,001 - £5,000,000  = 1%
Properties above £5,000,000 = 2%

E.G. tax payable on a new 5 year lease, paying £50,000 per annum subject to a premium of £160,000
 

a) Premium £160,000 is £10,000 over £150,000 threshold so 2% of £10,000 = £200

b) Net present value of rent £50,000 x 5 years  =  £250,000
 £150,001 - £250,000 = £99,999 @ 1%  = £999.99

Tax payable     = £1,199.99 

Refer to Stamp Duty Land Tax - gov.uk and always take advice from your solicitor and accountant.

Related Articles

Let Us Help You Sign Up To The Business You Desire This Summer

11 June

The summer football transfer window has opened early, due to this year’s World Cup, but, if you are looking to buy a business in the next few weeks to console yourself when the football viewing becomes too painful, Goadsby’s Business Transfer department can help you.

Read more

Business Rates Reduction Phasing

11 June

Marcus Andrews of Goadsby says that official figures shows that the retail sector was denied business rate reductions worth £584 million for the 2017/18 financial year, and that in 2018/19, they will miss out on a further £352 million of tax relief, because of the way the Government phases in business rate changes.

Read more

Goadsby Secure Office Sale on Bournemouth Airport

31 May

Acting on behalf of a private vendor, Goadsby have secured the sale of Oakland House on Aviation Business Park at Bournemouth Airport. This premises extend to approximately 2,000 sq ft and the quoting price was £325,000 (exclusive of VAT).

Read more
Your session will expire in xx.xx
Continue or Log Out