Stamp duty on commercial property is Stamp Duty Land Tax (SDLT), paid on non-residential and mixed-use land and buildings in England and Northern Ireland. As of October 2026 it is nil up to £150,000, 2% on the next £100,000 and 5% above £250,000. A return and payment are due within 14 days of completion.
At a glance
- Applies in
- England and Northern Ireland
- Non-residential threshold
- £150,000
- Freehold bands
- 0% to £150,000, 2% to £250,000, 5% above
- Rent on a new lease
- 0% to £150,000, 1% to £5m, 2% above (net present value)
- Return and payment
- Within 14 days of completion
- Scotland
- Land and Buildings Transaction Tax instead
- Wales
- Land Transaction Tax instead
What is stamp duty on commercial property?
Stamp duty on commercial property is Stamp Duty Land Tax (SDLT), a tax you pay when you buy non-residential or mixed-use land or property in England and Northern Ireland. GOV.UK says you must pay it if you buy property or land over a certain price, and the non-residential threshold is £150,000.
You pay it when you buy a freehold, buy a new or existing leasehold, or are transferred land or property in exchange for payment. It is a tax on the buyer, due on top of the price and legal costs, so it belongs in the budget for any purchase.
Capzy does not give tax or legal advice. Your solicitor or conveyancer will calculate the SDLT on your purchase, and the figures below are there to help you plan.
What counts as commercial or mixed-use property?
Non-residential property includes commercial buildings such as shops and offices, along with forests, working farmland and most land that is not part of a home’s garden or grounds. GOV.UK also treats six or more residential properties bought in a single transaction as non-residential.
A mixed property has both residential and non-residential parts, for example a flat connected to a shop, a doctor’s surgery or an office. GOV.UK’s non-residential and mixed rates apply to both, so these properties use the same bands as the table in the next section.
Agricultural land is a special case: residential rates apply if it is sold as part of the garden or grounds of a dwelling, such as a cottage with fields. If the classification is not obvious, ask your solicitor, because it changes the tax. Our guide to a semi-commercial mortgage covers how lenders approach mixed-use buildings.
What are the SDLT rates on a commercial freehold?
On a freehold commercial purchase, the first £150,000 is taxed at 0%, the next £100,000 at 2% and anything above £250,000 at 5%. You pay each rate only on the slice of the price that falls in that band, not on the whole price.
| Portion of the price | Rate |
|---|---|
| Up to £150,000 | 0% |
| £150,001 to £250,000 | 2% |
| Above £250,000 | 5% |
GOV.UK gives a worked example: a freehold commercial property bought for £275,000 costs nothing on the first £150,000, £2,000 on the next £100,000 and £1,250 on the final £25,000, so £3,250 in total.
The same arithmetic with a round, made-up price of £500,000 shows how the bands build. It is an illustration only, not a quote.
| Band | Calculation | Tax |
|---|---|---|
| First £150,000 | 0% × £150,000 | £0 |
| Next £100,000 | 2% × £100,000 | £2,000 |
| Remaining £250,000 | 5% × £250,000 | £12,500 |
| Total | £14,500 |
How is a commercial lease taxed?
A new commercial lease can be taxed twice, once on any premium you pay and once on the value of the rent. GOV.UK says these are calculated separately and then added together, with the premium taxed on the freehold bands above.
The rent is taxed on its net present value, which is based on the total rent over the life of the lease. You do not pay SDLT on the rent if the net present value is less than £150,000. If you buy an existing lease by assignment, you pay SDLT only on the price of the lease.
| Net present value of rent | Rate |
|---|---|
| £0 to £150,000 | 0% |
| £150,001 to £5,000,000 | 1% |
| Above £5,000,000 | 2% |
Taking a round, made-up example: with no premium and a net present value of rent of £400,000, the tax is 1% of the £250,000 above £150,000, which is £2,500. The calculation of net present value itself is technical, so rely on your solicitor or HMRC’s calculator for the real figure.
When do you have to file and pay?
You must send an SDLT return to HMRC and pay the tax within 14 days of completion. GOV.UK says you may be charged penalties and interest if you miss that deadline.
If you have a solicitor, agent or conveyancer, they will usually file the return and pay on the day of completion, then add the tax to their fees. If they do not, you can file and pay yourself. In practice the money is needed at completion, so it should be in your cash plan from the start.
GOV.UK says you must still send an SDLT return for most transactions under £150,000, even when no tax is due. You must also complete a return to claim any relief, even if no tax is payable.
Are there reliefs and exemptions?
Some purchases are exempt and some qualify for relief. GOV.UK says you do not have to pay SDLT or file a return in cases such as a transfer where no money or other payment changes hands, a property left to you in a will, or a freehold bought for less than £40,000.
- A new or assigned lease of 7 years or more is exempt where the premium is under £40,000 and the annual rent is under £1,000.
- A new or assigned lease of under 7 years is exempt where the amount you pay is below the relevant SDLT threshold.
- Reliefs exist for situations such as companies transferring property to another company, charities buying for charitable purposes and certain property investment funds.
- SDLT relief for multiple dwellings can no longer be claimed.
Whether a relief fits your deal depends on its facts and on conditions in HMRC’s detailed guidance, so ask your solicitor early. GOV.UK also lists situations where a refund may be possible, such as overpayment through a calculation mistake, or paying residential rates where non-residential rates applied.
What about Scotland and Wales?
Scotland and Wales do not use SDLT. In Scotland you pay Land and Buildings Transaction Tax, and in Wales you pay Land Transaction Tax for sales completed on or after 1 April 2018, and each has its own rates, returns and deadlines.
Northern Ireland is covered by SDLT, so a Belfast purchase follows the rules in this guide. If a deal spans borders, or you hold property in more than one nation, take advice on which tax applies to each piece.
Tax rates and thresholds change with Budgets. This guide reflects GOV.UK as read in October 2026, so check the current figures on GOV.UK or with HMRC’s calculator before you commit to a price.
How does stamp duty fit into funding a purchase?
Stamp duty is a cash cost at completion that sits alongside your deposit, legal fees and any valuation costs, so you need to account for it when you work out how much you must raise. Lenders set their own rules on what they will and will not fund, so ask early.
- Commercial mortgages are the usual route for long-term ownership of a business premises.
- Bridging loans are short-term and are sometimes used when a purchase must complete quickly.
- Development finance is for projects that build or convert property.
If you are buying a property as an investment, see our guide to commercial property investment. Lenders look closely at loan to value, which affects how large a deposit you need.
Where does Capzy fit in?
Capzy is a credit broker, not a lender, and is paid by the lender. We do not calculate or file SDLT, so use your solicitor for that, but we can introduce a business to lenders offering property finance.
You can check your funding options with a soft search that does not affect your credit score. A full application to a lender may involve a hard search, and any offer is subject to status and lender criteria. Property finance is usually secured, so your property is at risk if repayments are not made.
Sources
Capzy is a credit broker, not a lender. We get paid by the lender. This page is general information, not financial, tax or legal advice. Finance is subject to status, lender criteria and affordability; rates and terms depend on your circumstances.