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Is Stamp Duty payable on Commercial Property Leases?

Posted on January 20th 2021

The short answer to the above question is yes. Whilst it is common knowledge that Stamp Duty Land Tax (SDLT) is payable when purchasing a residential or commercial property, many people are not aware that SDLT can be payable on commercial leases.

How is SDLT calculated? 

The amount of SDLT payable on new commercial leases is based on a number of factors, such as the purchase price of the lease (commonly known as the lease premium), the annual rent and the length of the lease. These variables are used to calculate what is called the Net Present Value (NPV).

In most cases, the SDLT payable on commercial leases is calculated on the rates below:

  • If the NPV is less than £150,000 – there is no SDLT payable
  • The portion of NPV from £150,001 to £5,000,000 is liable at a rate of 1%
  • The portion of NPV above £5,000,000 is liable at a rate of 2%

When should I pay SDLT?

If you are a tenant renting commercial property, it is important that you pay SDLT within 14 days of the effective date of the lease to avoid late filing penalties and interest charges. The effective date is often the completion date, but it may be when some form of substantial performance of the transaction has taken place.

How can Oliver & Co help you?

Still confused? Our specialist commercial property solicitors can assist with the necessary advice associated with your lease and arrange for the appropriate SDLT Return to be submitted on time to avoid unnecessary interest charges and late filing penalties.

Due to the current COVID-19 restrictions we are unable to meet clients in person and instead our solicitors are able to conduct meetings online through a variety of video conferencing platforms or indeed via telephone conference which means that there is no need to travel or be local to Chester if you are seeking access to efficient and cost-effective advice.

If you would like to make an enquiry, please contact us by telephone on 01244 312306 or by email at law@oliverandco.co.uk.

Call and speak to a lawyer on 01244 312306