Stamp duty on commercial property is a tax on the purchase price of non-residential land and buildings, paid by the buyer when the purchase completes. For a trading business buying its own premises it is usually the largest single cost after the deposit, and it has to be paid in cash: a lender will not add it to the loan.
The UK does not have one stamp duty. England and Northern Ireland use Stamp Duty Land Tax (SDLT), Scotland uses Land and Buildings Transaction Tax (LBTT) and Wales uses Land Transaction Tax (LTT). Each has its own non-residential rates, bands and filing deadline, so the same freehold commercial property costs a different amount in tax depending on which side of a border it sits. We arrange business mortgages for companies buying the premises they trade from across all four nations, so we set the three taxes side by side here. This is finance for a trading business's premises, not a residential mortgage, and we are not tax advisers: confirm the figure for your purchase with your solicitor or accountant.
- SDLT applies in England and Northern Ireland, LBTT in Scotland and LTT in Wales, each with different non-residential rates and bands.
- On a £500,000 freehold commercial unit the tax is £14,500 in England and Northern Ireland, £13,500 in Scotland and £12,750 in Wales (rates as at October 2026).
- A new lease is taxed twice: once on any premium and once on the net present value of the rent.
- VAT charged on the price forms part of the chargeable consideration, so the tax is worked out on the VAT-inclusive figure.
- Lenders do not fund the tax. Budget for it in cash alongside your deposit.
What is Stamp Duty Land Tax on non-residential property?
Stamp Duty Land Tax SDLT is a tax on land and property purchases in England and Northern Ireland. Commercial stamp duty is charged on the chargeable consideration the buyer gives. For non-residential property, such as shops, offices, workshops, warehouses, surgeries and industrial units, it is charged in slices: each rate applies only to the portion of the price that falls within its band, in the same way as income tax.
The residential and non-residential regimes are separate. Residential property carries its own higher bands and surcharges; commercial SDLT has a lower top rate and no additional dwelling surcharge. Companies do need to pay stamp duty: a limited company buying its premises pays SDLT, LBTT or LTT exactly as an individual would, at the non-residential rates.
Scotland and Wales replaced SDLT with their own taxes. Both work on the same slice principle, but the thresholds and rates differ. If you are comparing premises in more than one nation, see our pages on business mortgages in Scotland and Wales, where the devolved taxes apply.
SDLT rates compared with LBTT and LTT
The table sets out the non-residential and mixed-use rates for a freehold purchase, or the premium on a lease, in each nation. Rates as at October 2026; check the current rates before you buy. Sources: HMRC (gov.uk, SDLT rates for non-residential and mixed land and property), Revenue Scotland (revenue.scot, LBTT non-residential property) and the Welsh Revenue Authority (gov.wales, Land Transaction Tax rates and bands).
| Portion of the price | SDLT: England and Northern Ireland | LBTT: Scotland | LTT: Wales |
|---|---|---|---|
| Nil-rate band | 0% up to £150,000 | 0% up to £150,000 | 0% up to £225,000 |
| Second band | 2% from £150,001 to £250,000 | 1% from £150,001 to £250,000 | 1% from £225,001 to £250,000 |
| Third band | 5% above £250,000 | 5% above £250,000 | 5% from £250,001 to £1,000,000 |
| Top band | No further band | No further band | 6% above £1,000,000 |
Two points stand out. Wales has the highest nil-rate band, so smaller premises cost the least there, but it is the only nation with a 6% slice, which bites on purchases above £1,000,000. England and Northern Ireland charge 2% on the second slice against 1% in Scotland and Wales, which is why SDLT is the highest of the three across most of the price range a trading business buys in.
HMRC, Revenue Scotland and the Welsh Revenue Authority each publish an online calculator. Use a stamp duty calculator from the right authority to calculate the figure on your actual purchase price, and ask your solicitor to confirm whether any relief or linked transaction rule applies.
How much tax on a £500,000 freehold unit?
Illustrative example. A trading company buys a freehold commercial property for £500,000, with no VAT charged and no linked transactions. Rates as at October 2026.
England and Northern Ireland: SDLT
- 0% on the first £150,000 = £0
- 2% on the next £100,000 (£150,001 to £250,000) = £2,000
- 5% on the remaining £250,000 (above £250,000) = £12,500
- Total SDLT: £14,500
Scotland: LBTT
- 0% on the first £150,000 = £0
- 1% on the next £100,000 (£150,001 to £250,000) = £1,000
- 5% on the remaining £250,000 (above £250,000) = £12,500
- Total LBTT: £13,500
Wales: LTT
- 0% on the first £225,000 = £0
- 1% on the next £25,000 (£225,001 to £250,000) = £250
- 5% on the remaining £250,000 (£250,001 to £500,000) = £12,500
- Total LTT: £12,750
The gap between the highest and lowest bill on the same building is £1,750. On a £500,000 purchase at 75% loan to value the deposit is £125,000, so the tax adds roughly a tenth again to the cash you need on completion. Our commercial mortgage calculator shows the loan side, and our guide to deposits and costs for business premises builds the full cost stack.
How is the tax worked out on a commercial lease?
Commercial leases are common for businesses that occupy part of a building or a unit on an estate. How the tax is calculated depends on whether you take a new lease from the landlord or buy an existing one.
New leases: premium plus rent
On a new lease there can be two charges. Any premium (a lump sum paid for the grant of the lease) is taxed using the same slice rates as a freehold purchase. Separately, the rent is taxed on its net present value, or NPV: the total annual rent payable over the term, discounted to today's money. The tax on the NPV is added to the tax on the premium.
| NPV of the rent | SDLT: England and Northern Ireland | LBTT: Scotland | LTT: Wales |
|---|---|---|---|
| Nil-rate band | 0% up to £150,000 | 0% up to £150,000 | 0% up to £225,000 |
| Middle band | 1% from £150,001 to £5,000,000 | 1% from £150,001 to £2,000,000 | 1% from £225,001 to £2,000,000 |
| Top band | 2% above £5,000,000 | 2% above £2,000,000 | 2% above £2,000,000 |
Rates as at October 2026; sources as above. Under SDLT you do not pay tax on the rent if the NPV is below £150,000, so most small leases attract no charge on the annual rent itself. In Scotland, LBTT leases also need a further return every three years over the life of the lease, so the obligation does not end at completion.
Assigning an existing lease
When you buy an existing lease from the current tenant, the tax is charged on the price you pay for it, not on the rent.
The present value NPV calculation uses a statutory discount rate, so let the official calculator or your solicitor run it. Leasehold extensions and variations can also trigger a charge.
Mixed-use and semi-commercial buildings
A mixed-use property has both residential and non-residential parts: a shop with a flat above, a surgery with living accommodation, a pub with a landlord's flat. In all three regimes a mixed purchase is taxed at the non-residential rates in the table above, not the residential ones. HMRC's own definition gives "a flat connected to a shop, doctor's surgery or office" as an example, and Revenue Scotland and the Welsh Revenue Authority apply the same principle to mixed transactions.
That usually means a lower bill than residential property of the same value. The finance side is different: if you or a close family member will live in the flat, the loan may become a regulated mortgage. Commercial lending to a limited company is unregulated and falls outside the Financial Conduct Authority (FCA) regulated mortgage perimeter. Where a deal would be regulated, for example lending to a sole trader or individual, or a property where the borrower or a close family member will live in part of it, we refer it to an appropriately authorised firm. Our page on semi-commercial premises covers how lenders treat these buildings.
Does VAT count towards the stamp duty bill?
Yes. Where the seller charges VAT on the sale, that VAT forms part of the chargeable consideration for SDLT, LBTT and LTT. HMRC's SDLT manual says chargeable consideration includes any VAT payable on the transaction, even if the buyer can reclaim it later. Revenue Scotland and the Welsh Revenue Authority say the same for LBTT and LTT.
Illustrative example. A £500,000 office in England is sold with VAT at the standard rate of 20% (gov.uk, VAT rates), so the price becomes £600,000. SDLT on £600,000 is 0% on £150,000, 2% on £100,000 (£2,000) and 5% on £350,000 (£17,500): £19,500, against £14,500 without VAT. The £5,000 difference is not recoverable even when the VAT itself is.
The exception is where the seller opts to tax only after the effective date of the transaction: VAT that becomes payable later in that way is not part of the chargeable consideration. Our guide to VAT on commercial property purchases explains the option to tax and transfers of a going concern.
When is the SDLT return due, and who files it?
The deadlines differ by nation:
- SDLT (England and Northern Ireland): the SDLT return must be filed, and the SDLT due paid, within 14 days of completion (HMRC, gov.uk).
- LBTT (Scotland): the return and payment are due within 30 days, beginning with the day after the effective date (Revenue Scotland).
- LTT (Wales): the return and payment are due within 30 days, beginning with the day after the effective date, counted in calendar days (Welsh Revenue Authority, gov.wales).
The effective date is usually completion, although a buyer who takes possession or pays most of the price before completion can trigger it earlier. In practice your solicitor files the return and pays the tax on your behalf, usually on the day of completion, from funds you have sent them. Late returns and late payment attract penalties and interest, so the cash must be in your solicitor's client account before completion day.
If you think you have overpaid, for example because a mixed-use building was treated as residential, amendments and claims can be made within time limits set by each authority. That is specialist tax work.
Paying the tax alongside your business mortgage
Lenders active in owner-occupier lending lend against the purchase price or valuation, whichever is lower, and stop there. Commercial stamp duty, legal fees, valuation fees and any VAT come from your own funds. When we package a business mortgage we show the lender the full source of funds for the deposit and the tax, because a gap at that stage delays the offer.
Where the business has the deposit but not the tax, options include releasing equity from other commercial property or a different structure such as buying through a pension, where the scheme pays the tax. Indicative owner-occupier pricing is 6.0 to 7.5% a year, typically at 70 to 75% loan to value, subject to status, accounts and valuation; our costs page has the full picture.
This guide is general information, not tax advice. Rates as at October 2026; check the current rates before you buy, and take advice from a solicitor or tax adviser on your own purchase.
