Does the Extra Stamp Duty Apply to Non-Residential Property?

In April 2016 the government introduced the extra 3% stamp duty for purchases of second and further properties in the UK. This was to discourage the recent buy to let phenomenon which has meant that a lot of first time buyers are struggling to get on the property ladder.

However, there are a lot of conditions on the way the extra 3% rate is being applied and in the final Guidance Note issued by the government there was clarification on what type of purchase the charge applied to.

The guidance notes include the following:

When the higher rates will not apply

2.11 The higher rates will not apply to purchases of:

  • non-residential or mixed use properties;
  • transactions where the consideration is less than £40,000; and 4 Para 17 5 Paras 3(2), 4(c), 5(2), 6(1)(c) and 7(c) 6
  • caravans, houseboats and mobile homes .

So if you are asking the question “does the extra stamp duty apply to non-residential property” then you can see from the extra from the guidance notes that it does not apply.

In addition to this the extra stamp duty also does not apply to mixed use properties which means that if you are looking for a property investment that does not incur the extra payment, then you will need to be looking at non-residential property, mixed use property or property that costs less than £40,000.

Obviously any investment you make is going to be subject to a wide range of considerations as to whether it is right for you or not but this is one way of not having to pay the 4% extra stamp duty.

Does the Extra Stamp Duty Apply to Non-Residential Property?

5 thoughts on “Does the Extra Stamp Duty Apply to Non-Residential Property?

  1. Hi
    I own half of a mixed use property. Shop downstairs and I live in the flat above. I’m buying a house for my main residence and keeping my current property.
    A guy at HMRC just advised me I am exempt from higher rate stamp duty due to the mixed use status of my property. I’ve read elsewhere this isn’t the case. Not sure what to do now?

    1. Sorry for the delay in replying. Yes, it is also our understanding that a mixed use does not mean you have to pay the extra stamp duty on another property. The best thing would be to get it in writing from HMRC so that you have that for your solicitor or at least get the name of the person you spoke to at HMRC.

  2. I am bit confused to what Stamp duty I need to pay in England. I am looking to purchase a property for £239 000, I have never bought any property or own any dwelling property; but I have inherited some land many years ago from my mother in the Republic of Ireland. Am I still considered a first time buyer and owning this non residential land in Ireland; does this even come into the calculation for Stamp duty tax?

    1. Hi Logan, obviously you should consult with your solicitor on this but it is our understanding that the extra 3% stamp duty only applies to residential property and not land so it is likely the case that you would just need to pay the standard rate of stamp duty which, for a purchase price of £239,000 at current rates of stamp duty, would amount to £2,280. Having said that, it may be the case that you do not need to pay any stamp duty at all as you may be eligible for a 0% rate as a first time buyer of a residential property costing less than £300,000. You would need to be buying the property as your main residence for this relief and other conditions are attached so check this with your solicitor too.

      1. Thanks; from what I have read it should be exempt, but the guidance isn’t that clear; however HMRC, does state other land without dwellings under the exceptions. But regardless I am glad to hear that at worst it might be £2280. It is funny, my impression is that only HMRC fully understand the guidance in some situations. You read in some law colleges how they interpret it, without an exact clarity.

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