Stamp Duty on Commercial Property UK: 2026 Rates & How It Works
If you’re buying a shop, office, warehouse, or any other non-residential property in England or Northern Ireland, you’ll usually pay Stamp Duty Land Tax (SDLT) once the price passes £150,000. The rate rises in stages: 0% on the first £150,000, 2% on the next £100,000, and 5% on everything above £250,000. This guide covers exactly how that tax is calculated, what happens with leases and VAT, which reliefs might apply, and how commercial rates compare to residential ones.
What Is Stamp Duty on Commercial Property?
Stamp Duty Land Tax is a tax charged by HMRC when you buy land or property in England or Northern Ireland. Commercial property — also called non-residential property — has its own set of rates, and they’re structured differently from the residential rates most people are familiar with.
You pay it on the purchase price or market value, whichever is higher. That applies whether you’re buying as a sole trader, a partnership, or a limited company, and whether the property is freehold or leasehold with a premium attached.
If you’re weighing up how a commercial purchase fits into a wider business structure, it’s worth reading up on company director responsibilities before you commit to buying through a limited company.
SDLT vs Residential Stamp Duty: What’s Different
Commercial SDLT has fewer bands and a lower top rate than residential SDLT. Residential rates run up to 12% (higher still with surcharges for additional properties or non-UK residents), while commercial tops out at 5%. There’s no first-time buyer relief, no additional-property surcharge, and no non-resident surcharge on commercial purchases — the rules are simpler across the board.
Do You Have to Pay Stamp Duty on Commercial Property?
Yes, if the purchase price is £150,000 or more. Below that threshold, no SDLT is due, though you may still need to file a return.
Non-residential property covers:
- Shops, offices, and retail units
- Warehouses and industrial premises
- Forests and working agricultural land
- Any land or property that isn’t part of a dwelling’s garden or grounds
- Six or more residential properties bought in a single transaction
A “mixed-use” property — a flat above a shop, for example — also falls under these non-residential rates rather than residential ones, which is often cheaper for buyers.
If you buy a commercial unit for £140,000, you owe nothing. If you buy one for £160,000, tax applies only to the £10,000 above the threshold.
Commercial Property Stamp Duty Rates 2026
| Portion of purchase price | SDLT rate |
|---|---|
| Up to £150,000 | 0% |
| £150,001 to £250,000 | 2% |
| Above £250,000 | 5% |
These rates have applied since 17 March 2016, under the Finance Act 2016, which moved non-residential SDLT from a single “slab” rate to a banded “slice” system. Only the portion of the price within each band is taxed at that band’s rate — the whole price is never taxed at the top rate.
How to Calculate Stamp Duty on a Commercial Property Purchase
Work out what falls in each band, apply the relevant rate, then add the totals together.
Example 1: £275,000 freehold purchase
- 0% on the first £150,000 = £0
- 2% on the next £100,000 = £2,000
- 5% on the remaining £25,000 = £1,250
- Total SDLT = £3,250
Example 2: £500,000 freehold purchase
- 0% on the first £150,000 = £0
- 2% on the next £100,000 = £2,000
- 5% on the remaining £250,000 = £12,500
- Total SDLT = £14,500
Quick-Reference Table: SDLT at Common Price Points
| Property value | SDLT payable |
|---|---|
| £150,000 | £0 |
| £200,000 | £1,000 |
| £250,000 | £2,000 |
| £300,000 | £4,500 |
| £500,000 | £14,500 |
| £750,000 | £27,000 |
| £1,000,000 | £39,500 |
| £2,000,000 | £89,500 |
| £5,000,000 | £239,500 |
These figures are a guide. Your solicitor will confirm the exact liability, and it can differ for linked transactions or company purchases — both covered below.
Stamp Duty on Commercial Property Leases
If you’re taking a lease rather than buying freehold, SDLT can apply to two separate things: any premium you pay to secure the lease, and the rent itself.
The premium is taxed using the same freehold table above. The rent is taxed separately, based on its net present value (NPV) — essentially the total rent over the life of the lease, discounted to reflect today’s money.
| Net present value of rent | SDLT rate |
|---|---|
| £0 to £150,000 | 0% |
| £150,001 to £5,000,000 | 1% |
| Above £5,000,000 | 2% |
HMRC uses a 3.5% discount rate to calculate NPV (set out in its SDLT manual at SDLTM13075). The two elements — premium and rent — are calculated separately, then added together for your total bill.
NPV Worked Example
A 10-year commercial lease at £50,000 a year in rent has an NPV of roughly £415,000. SDLT on that is 1% on the £265,000 above the £150,000 threshold, which comes to £2,650. A 25-year lease at the same rent has an NPV of around £825,000, giving an SDLT bill of about £6,750. Add SDLT on any premium at the standard rates on top of that.
HMRC’s own SDLT calculator will work out the NPV for you, accounting for rent reviews and lease length, so it’s worth using that as a check once your solicitor gives you the figures.
Does VAT Affect Stamp Duty on Commercial Property?
Yes. SDLT is calculated on the VAT-inclusive price if the seller has “opted to tax” the property. That means 20% VAT gets added to the purchase price first, and stamp duty is worked out on the higher, VAT-inclusive figure.
Example: £500,000 property, seller has opted to tax
- Purchase price = £500,000
- VAT at 20% = £100,000
- Total consideration for SDLT = £600,000
- SDLT payable = £19,500 (versus £14,500 without VAT)
A VAT-registered buyer can usually reclaim the VAT itself, but the extra SDLT this creates cannot be recovered. Always check a property’s VAT status with the seller’s solicitor before exchanging contracts — it’s an easy detail to miss and it changes your budget materially.
Stamp Duty for Companies and Corporate Buyers
A common misconception is that limited companies pay a flat, higher SDLT rate on commercial property, the way they sometimes do on residential property. That’s not the case for non-residential purchases. There’s no equivalent of the 17% flat corporate rate that applies to residential property above £500,000.
Companies, partnerships, and sole traders all pay the same banded commercial rates shown above. If you’re setting up a company structure specifically to hold property, it’s worth understanding the basics of what a shareholder agreement covers and how company director responsibilities apply once the purchase completes.
Linked Transactions — Buying Multiple Properties
If you buy more than one property from the same seller — or connected sellers — in a single transaction or as part of a series of transactions, HMRC treats these as linked transactions. Instead of calculating SDLT on each property separately, you add the purchase prices together and apply the rates to the combined total.
This matters for anyone buying a portfolio, such as several retail units in one block, because it can push a chunk of the total price into the 5% band that wouldn’t have applied if each property were bought individually. If you’re expanding a property portfolio as part of a wider growth plan, it’s worth reading more on how to scale a small business alongside your acquisition strategy.
Reliefs and Exemptions from Commercial SDLT
Some transactions qualify for relief, which reduces or removes the SDLT due. The main ones are:
- Group relief — transfers between companies in the same corporate group, where both buyer and seller are group members at the effective date
- Charities relief — purchases by charities, provided the property will be used for charitable purposes
- Certain leases — including low-rent leases and some agricultural land arrangements
Check the full list of available reliefs on GOV.UK before assuming your transaction qualifies, since eligibility rules are specific and easy to get wrong.
When and How Stamp Duty Must Be Paid
SDLT is due within 14 days of the effective date of your transaction — usually the completion date. Your solicitor or conveyancer normally files the SDLT return and arranges payment to HMRC from your completion funds.
- Solicitor calculates the SDLT due based on the final purchase price and any lease terms
- Return is filed with HMRC within 14 days of completion
- HMRC issues an SDLT5 certificate
- The Land Registry requires that certificate before it will register your title
Miss the 14-day deadline and interest starts accruing from day 15. If you’re completing on a tight timeline — an auction purchase, for instance — confirm with your solicitor exactly when payment will go through.
Stamp duty is paid upfront, separately from your mortgage. Lenders base a commercial mortgage on the property’s value, not your total transaction costs, so you’ll need funds ready to cover it alongside your deposit and legal fees.
Stamp Duty on Commercial Property in Scotland and Wales
SDLT only applies in England and Northern Ireland. Scotland and Wales run their own systems.
Scotland — Land and Buildings Transaction Tax (LBTT)
| Portion of purchase price | LBTT rate |
|---|---|
| £0 to £150,000 | 0% |
| £150,001 to £250,000 | 1% |
| Above £250,000 | 5% |
Wales — Land Transaction Tax (LTT)
Wales taxes non-residential property under LTT, administered by the Welsh Revenue Authority, using its own bands and rates that differ from both SDLT and LBTT. Check the current thresholds on the Welsh Government’s website before budgeting for a Welsh purchase, since these rates are reviewed independently of England’s.
FAQs
Do you pay stamp duty on commercial property in the UK?
Yes, if the purchase price is £150,000 or more in England or Northern Ireland. Below that, no SDLT is due.
How much is stamp duty on commercial property?
It’s calculated in bands: 0% up to £150,000, 2% on the next £100,000, and 5% on anything above £250,000. A £500,000 purchase, for example, costs £14,500 in SDLT.
Is commercial stamp duty cheaper than residential?
Generally, yes. Commercial rates top out at 5%, compared with up to 12% for residential property, and there’s no additional-property or non-resident surcharge on commercial purchases.
Do you pay stamp duty on a commercial lease?
Yes, potentially on two elements: any lease premium, taxed at the standard commercial rates, and the rent, taxed based on its net present value.
Does a limited company pay more stamp duty on commercial property?
No. Companies pay the same banded rates as individuals and partnerships on non-residential property — there’s no flat corporate surcharge, unlike with residential purchases.
How long do I have to pay stamp duty after buying commercial property?
14 days from the effective date of the transaction, which is usually completion. Your solicitor normally files the return and arranges payment on your behalf.
