SDLT and mixed-use properties
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:
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:
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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