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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SDLT and mixed-use properties