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Inderdeep
Inderdeep,
Category: Tax
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I have a stamp duty land tax query for my company purchasing

Customer Question

I have a stamp duty land tax query for my company purchasing a leasehold interest for an upfront premium and rent
JA: Have you talked to a tax professional about this?
Customer: no
JA: Is there anything else the Accountant should know before I connect you? Rest assured that they'll be able to help you.
Customer: the consideration is £125,000 premium and £3,000 per annum rent (first ten years, then escalating by CPI for those ten years, and subsequent teny year revisions on the same basis) for a 55 year lease, and includes the acquisiton of a single storey pre-fab building formerly used as a kennel by a breeder of pedigree show dogs, which we will re-commision for use as storage, and associated land.
Submitted: 20 days ago.
Category: Tax
Customer: replied 20 days ago.
hello...is someone still working on this?
Expert:  Virtual-mod replied 19 days ago.
Hello,

I've been working hard to find a Professional to assist you with your question, but sometimes finding the right Professional can take a little longer than expected.

I wonder whether you're ok with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.

Thank you!
Customer: replied 19 days ago.
I am waiting.
Expert:  oleksandrav-mod replied 16 days ago.
Hello,
I apologise as we have not yet been able to find a Professional to assist you. Do you wish for me to continue to search for someone to assist you or would you like for us to close your question at this time?
Thank you for your patience,
Oleksandra-Moderator
Customer: replied 16 days ago.
I am waiting still please
Expert:  Inderdeep replied 14 days ago.
Thank you for using just answer i will be assisting you today.
Expert:  Inderdeep replied 14 days ago.

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Expert:  Inderdeep replied 14 days ago.

What is your query please

Expert:  Inderdeep replied 14 days ago.

Are you wanting to know your liability for SDLT?

Customer: replied 14 days ago.
This was/is my enquiry as above:
I have a stamp duty land tax query for my company purchasing a leasehold interest for an upfront premium and rent
JA: Have you talked to a tax professional about this?
Customer: no
JA: Is there anything else the Accountant should know before I connect you? Rest assured that they'll be able tohelp you.
Customer: the consideration is £125,000 premium and £3,000 per annum rent (first ten years, then escalating by CPI for those ten years, and subsequent teny year revisions on the same basis) for a 55 year lease, and includes the acquisiton of a single storey pre-fab building formerly used as a kennel by a breeder of pedigree show dogs, which we will re-commision for use as storage, and associated land.
Customer: replied 14 days ago.
I am hard of hearing, so I hope my explanation is clear
Expert:  Inderdeep replied 14 days ago.

With commercial property the rates of SDLT are different to that of residential. When you buy a leasehold non residential property you pay SDLT on both the purchase price of the lease (the ‘lease premium’) and the value of the annual rent you pay (the ‘net present value’). These are calculated separately then added together.

The net present value (NPV) is based on the total rent over the life of the lease. You do not pay SDLT on the rent if the NPV is less than £150,000.

The rates are:

Up to £150,000 - Zero

The next £100,000 (the portion from £150,001 to £250,000) 2%

The remaining amount (the portion above £250,000) 5%

You can use the SDLT calculator to input the details and it will provide you with the figure payable. I have done a rough calculation and you would not be liable for SDLT based from the information provided ( i have not had sight of any documentation so this could change).  Please note even if no SDLT is payable a return is still required to be filed.

You should use the link below to calculate the amount payable:-

https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro

Expert:  Inderdeep replied 14 days ago.

I hope this has assisted your enquiry and thank you using our services.

Customer: replied 7 days ago.
Thank you for your response. I can see the expression "commercial property" appears critical to the determination and yet without a definition of this expression there is no clear answer. My limited company business operates, amongst other activities, a Post Office and would be using the building for secure storage for that other business purposes. Does that make it a "commercial property"? In contrast, before the acquisition the building is contained within a current single title that includes the residence of the freeholder. Clearly the acquisition building is not a residence from the point of view of my limited company and its proposed use, but it may be that is completely irrelevant for the stamp duty aspect. The person has been using the building for many year as a kennel for what is in effect the professional showing and sale of a certain breed of pedigree dogs. It has therefore been used for many years as an asset for generating income as part of this activity but within the same title as his residence. I can find no record of a business rate associated with the building, but the planning status of a building that has been used for a commercial purpose for, in this case, 18 years is perhaps determined by such use..and not by the failure on either the part of the LA to apply a business rate, which often happens, or the owner the owner not formally establishing the building's commercial us in the planning record, if the planning status is relevant to this question on SDLT?In the HMRC Stamp Duty Land Tax Calculator it would appear in this case obtuse to pick the "residential" option at the "residentail" - or - "non-residential" stage - but the obtuse choice may be the correct one?
Customer: replied 7 days ago.
I am hard of hearing, so cannot manage the phone, but I am happy to pay the charge of £44
Expert:  Inderdeep replied 7 days ago.
From the information provided it appears this would be a commercial transaction as it is a business which is being sold and purchased by you. If the property is being lived in then it is deemed residential for the purposes of SDLT, this would be mixed use and fall under the commercial aspect.