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

Goadsby Commercial Let Another Winchester City Centre Office

14 January

Goadsby Commercial are delighted to have let 478 sq ft office space in the popular City Business Centre in Hyde Street, central Winchester.

Read more

Goadsby Commercial Welcome Resourceful Marketing To New High Street Premises In Winchester

10 January

Goadsby Commercial are delighted to have let another all-inclusive office suite in the sought after location that is Winchester High Street, to a local business-to-business (B2B) sales and marketing consultancy.

Read more

Goadsby Commercial Let Business Units In Popular Winchester Industrial Estate

10 January

Goadsby Commercial have on behalf of a private landlord successfully let Unit 7 (884) sq ft and Unit 6c (278 sq ft) Scylla Industrial Estate, a mixture of well-located business start-up suites in Winchester.

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