UK SDLT Commercial Property 2026/27: Non-Residential Rates, Leases and Reliefs
SDLT on commercial property 2026/27: non-residential bands, lease NPV, mixed-use, the 6-dwelling rule, MDR abolition, group relief, VAT and ATED.
2026/27 commercial SDLT at a glance
0% band
Up to £150,000
No SDLT on the first £150,000
2% band
£150,001-£250,000
The next £100,000
5% band
Above £250,000
The remaining amount
Return and payment
14 days
From the effective date
SDLT applies in England and Northern Ireland. Scotland has LBTT and Wales has LTT (see the FAQ).
7 worked SDLT scenarios
| Scenario | Consideration / rent | SDLT | Breakdown |
|---|---|---|---|
| Small office freehold purchase Below £250,000, so only the 2% slice applies above £150,000. | £200,000 | £1,000 | 0% on £150,000 + 2% on £50,000 |
| Industrial unit freehold Crosses both the 2% and 5% bands. | £600,000 | £19,500 | 0% on £150,000 + 2% on £100,000 + 5% on £350,000 |
| Retail premises purchase Most of the consideration falls in the 5% band. | £1,500,000 | £64,500 | 0% on £150,000 + 2% on £100,000 + 5% on £1,250,000 |
| Office lease 10-yr, £40k rent Rent discounted at 3.5% a year; 1% applies to the NPV above £150,000. | / £40,000/yr × 10y | £1,827 | NPV £332,664, lease SDLT 0% to £150,000 + 1% above |
| Office lease 20-yr, £100k rent + £200k premium Premium taxed at the non-residential rates, plus SDLT on the NPV of the rent. | £200,000 / £100,000/yr × 20y | £13,712 | Premium SDLT £1,000 + rent NPV (£1,421,240) SDLT £12,712 |
| Mixed-use shop with flat above Includes non-residential property, so the non-residential rates apply to the whole price. | £500,000 | £14,500 | 0% on £150,000 + 2% on £100,000 + 5% on £250,000 |
| 6+ dwellings in one transaction 6 or more dwellings in a single transaction are treated as non-residential (FA 2003 s.116(7)). | £2,400,000 | £109,500 | 0% on £150,000 + 2% on £100,000 + 5% on £2,150,000 |
Lease NPV calculation method
For a new non-residential lease there are two calculations: SDLT on any premium at the non-residential rates, and SDLT on the net present value of the rent, discounted at 3.5% a year (FA 2003 Sch 5).
| NPV range | Rate |
|---|---|
| £0 - £150,000 | 0% |
| £150,001 - £5,000,000 | 1% |
| Above £5,000,000 | 2% |
NPV formula for a level annual rent: NPV = rent × ((1 - 1.035^(-n)) / 0.035) where n = lease term in years. Where rent varies, each year's rent is discounted separately; rent after year five is taken as the highest 12 months' rent in the first five years (Sch 17A para 7).
Mixed-use vs residential rates
Where a purchase includes property that is not residential, the non-residential rates apply to the whole price. For higher-value property this can be substantially less than residential SDLT, especially where the 5% higher rates for additional dwellings would apply.
£1,500,000 shop with flat above (mixed)
Non-residential SDLT: 0% × £150,000 + 2% × £100,000 + 5% × £1,250,000 = £64,500
£1,500,000 purely residential
Residential SDLT 2026/27: £93,750, or £168,750 with the 5% higher rates
From our stamp duty calculator
Caution: land that is part of the garden or grounds of a dwelling is residential. In Hyman v HMRC [2022] EWCA Civ 185 the Court of Appeal held that there is no quantitative limit on garden or grounds, so a house with a paddock or fields can still be wholly residential. A genuine non-residential element, such as a shop with a flat above, is what brings the mixed rates into play.
Related guides
Frequently asked questions
What are the commercial (non-residential) SDLT bands for 2026/27?
In England and Northern Ireland: 0% on the first £150,000, 2% on the portion from £150,001 to £250,000, and 5% on the portion above £250,000 (FA 2003 s.55; gov.uk). Each rate applies only to the slice of the price in its band; the slab system for non-residential property was replaced on 17 March 2016. Example - £500,000: £0 on the first £150,000, £2,000 on the next £100,000, £12,500 on the remaining £250,000: total £14,500. The 5% higher rates for additional dwellings, the 2% non-UK resident surcharge, the 17% corporate rate and first-time buyer relief all relate to residential property only. You must still send an SDLT return for most transactions under £150,000. Where VAT is charged on the price, SDLT is charged on the VAT-inclusive amount (FA 2003 Sch 4 para 2).
How is SDLT calculated on commercial leases?
A new non-residential lease can carry two charges. (1) Premium: any lump sum is taxed at the non-residential rates above. (2) Rent: SDLT is charged on the net present value (NPV) of the rent over the term, discounted at 3.5% a year (FA 2003 Sch 5 para 8): 0% up to £150,000, 1% on the portion from £150,001 to £5,000,000, and 2% above £5,000,000 (gov.uk). For a level rent, NPV = rent x ((1 - 1.035^-n) / 0.035). Example - 10-year lease at £40,000 a year: £40,000 x 8.317 = about £332,664, so SDLT on the rent is £1,827: 1% of the NPV above £150,000. Rent reviews: where rent in the first five years is variable or uncertain, it is estimated, and a further return may be needed when it becomes certain or at the end of year five; rent after year five is assumed to equal the highest 12 months of rent in the first five years (FA 2003 Sch 17A paras 7-8). A variation that increases rent in the first five years, other than under the lease terms, is treated as the grant of a new lease (Sch 17A para 13). Assignments are taxed on any consideration the assignee gives; special rules treat the first assignment of a lease whose grant was relieved as a grant (Sch 17A para 11).
What is the mixed-use rule?
Where the property bought consists of or includes land that is not residential, the non-residential rates apply to the whole price (FA 2003 s.55; s.116 defines residential property). Example - £1,500,000: as mixed property, £64,500; as a purely residential purchase at the 2026/27 rates, £93,750, or £168,750 with the 5% higher rates for an additional dwelling. Gardens and grounds: land that is or forms part of the garden or grounds of a dwelling counts as residential, and in Hyman v HMRC [2022] EWCA Civ 185 the Court of Appeal held there is no quantitative limit on how large garden or grounds can be, so paddocks or fields that go with a house can still be residential. Genuine examples of mixed property include a shop with a flat above and agricultural land that is part of a working farm (gov.uk). Keep evidence of the non-residential use.
What is the 6+ dwelling rule?
Where 6 or more separate dwellings are the subject of a single transaction, they are treated as not residential property for SDLT (FA 2003 s.116(7)), so the non-residential rates apply. Since Multiple Dwellings Relief was abolished this is not a choice: HMRC says that where MDR is not available, s.116(7) applies to a single transaction of six or more dwellings (SDLTM29901). Example - £2,400,000 for 6 flats in one transaction: 0% on £150,000 + 2% on £100,000 + 5% on £2,150,000 = £109,500. It must be a single transaction; separate purchases may instead be linked transactions.
What was Multiple Dwellings Relief (MDR) and when was it abolished?
MDR let a buyer of more than one dwelling in a single or linked transaction work out SDLT on the average price per dwelling. It was abolished for transactions completing (or substantially performed) on or after 1 June 2024. Buyers who exchanged contracts on or before 6 March 2024 remain eligible regardless of when the transaction completes, provided the contract is not varied after that date, and there are transitional rules for linked transactions straddling the change (SDLTM29901). Before abolition, buyers of six or more dwellings could choose between MDR and the s.116(7) non-residential treatment; that choice no longer exists.
How does SDLT interact with corporate structures?
Companies buying residential property: SDLT is charged at 17% on a dwelling costing more than £500,000 bought by a company, a partnership with a corporate partner or a collective investment scheme (FA 2003 Sch 4A; the rate was raised to 17% from 31 October 2024). Reliefs from the 17% rate cover, among others, property rental businesses, developers and traders, property made available to the public, lending by financial institutions, dwellings for employees and farmhouses (gov.uk). The 17% rate is a single flat rate, not added to anything else; where it does not apply (a price of £500,000 or less, or a relief is claimed) a company buying a dwelling pays the 5% higher rates instead. The 2% non-UK resident surcharge applies on top of either for non-resident buyers (FA 2003 Sch 9A). Commercial property bought by a company: no surcharge; the ordinary non-residential rates apply. Group relief: transfers between companies in the same group (75% relationship) are exempt (FA 2003 Sch 7 para 1), with withdrawal of the relief if the buyer leaves the group within 3 years (para 3). ATED may also apply to enveloped dwellings - see below.
What are linked transactions and how do they affect SDLT?
Transactions are linked if they form part of a single scheme, arrangement or series of transactions between the same seller and buyer, or persons connected with either of them (FA 2003 s.108). For linked transactions, the rates are applied to the total consideration. Example: a company sells two adjoining commercial units to two connected companies for £200,000 each. Linked, SDLT is worked out on £400,000: £9,500 in total, compared with £2,000 if each £200,000 purchase were taxed on its own. Splitting a single deal into separate contracts does not avoid the rule. Errors in a return can attract penalties under FA 2007 Sch 24.
What reliefs and exemptions are available?
Group relief - FA 2003 Sch 7 Part 1, transfers within a 75% group, withdrawn if the buyer leaves the group within 3 years. Reconstruction relief and acquisition relief - Sch 7 Part 2 (paras 7 and 8), for certain company reorganisations. Charities relief - Sch 8 (s.68), where the buyer is a charity and the conditions are met. Sale and leaseback - s.57A exempts the leaseback element where the qualifying conditions are met. Compulsory purchase facilitating development - s.60. Right to buy and shared ownership - Sch 9 (residential). Each relief has conditions and must be claimed in the SDLT return; some can be withdrawn later.
When and how do I pay SDLT on commercial purchases?
The SDLT return and the tax are due within 14 days of the effective date, usually completion (FA 2003 s.76; the period was cut from 30 days for transactions with an effective date on or after 1 March 2019). Late filing: £100 if the return is up to 3 months late, £200 after that, and a further tax-related penalty of up to the amount of tax if it is more than 12 months late (FA 2003 Sch 10 paras 3-4). Late payment interest: charged at Bank Rate plus 4 percentage points; 7.75% from 9 January 2026 (HMRC). Amendments: the buyer can amend the return up to 12 months after the filing date, which is the 14-day deadline (Sch 10 para 6). Liability: the buyer is liable for the tax, even when a conveyancer files and pays. HMRC issues an SDLT5 certificate, which HM Land Registry needs to register the transfer.
How does the option to tax (VAT) affect SDLT on commercial?
If the seller has opted to tax and charges VAT, SDLT is charged on the VAT-inclusive price (FA 2003 Sch 4 para 2), except VAT arising from an option to tax made after the effective date. Example: £1,000,000 plus 20% VAT = £1,200,000, SDLT £49,500 compared with £39,500 on £1,000,000 - an extra £10,000 that is not recovered even if the buyer can reclaim the VAT. Transfer of a going concern: where a let property business is sold as a going concern and the conditions are met, the sale is not a supply for VAT, so no VAT is charged and SDLT is on the VAT-free price; for opted property the buyer must have opted to tax, notified HMRC and notified the seller by the relevant date (VAT Notice 742A section 11). Revoking an option: generally possible only within a 6-month cooling-off period or once more than 20 years have passed (VATA 1994 Sch 10 paras 23 and 25). Confirm the VAT position early.
What is ATED and how does it affect commercial / residential property?
ATED is an annual charge mainly on companies (and partnerships with a corporate member and collective investment schemes) that own a UK dwelling valued at more than £500,000 (Finance Act 2013 Part 3, ss.94-174). It does not apply to commercial property. Charges for 1 April 2026 to 31 March 2027: More than £500,000 up to £1 million £4,600; More than £1 million up to £2 million £9,450; More than £2 million up to £5 million £32,200; More than £5 million up to £10 million £75,450; More than £10 million up to £20 million £151,450; More than £20 million £303,450 (gov.uk). ATED chargeable periods run from 1 April to 31 March, and returns are due by 30 April at the start of each period, including where a relief is claimed. Reliefs include property rental businesses, developers and traders, and dwellings for employees.
How does SDLT differ across UK jurisdictions?
England and Northern Ireland: SDLT, administered by HMRC. Scotland: Land and Buildings Transaction Tax (Revenue Scotland). Non-residential rates: 0% up to £150,000, 1% from £150,001 to £250,000, 5% above £250,000; the Additional Dwelling Supplement on residential property is 8% of the price from 5 December 2024. Wales: Land Transaction Tax (Welsh Revenue Authority). Non-residential rates: 0% up to £225,000, 1% from £225,001 to £250,000, 5% from £250,001 to £1,000,000, 6% above £1,000,000. The tax that applies depends on where the land is, not where the buyer lives. LBTT and LTT returns are due within 30 days; SDLT within 14 days.