Costs, SDLT and tax

Commercial Property SDLT Rates and How VAT Changes Them

PropertyVAT Team · Updated 21 October 2026 · 2 min read

Stamp duty on commercial property is more forgiving than the residential regime, but it has one feature that catches VAT-affected deals: it is banded, and VAT goes into the consideration.

How the bands work

For non-residential freehold purchases in England and Northern Ireland, SDLT is charged in slices. Each portion of the price is taxed at the rate for its band, rather than the whole price being taxed at one rate.

Rates and thresholds are set by government and do change, so confirm the current position before relying on a calculation.

Worked example without VAT

A £500,000 purchase with no VAT:

• First £150,000 at 0% = £0
• Next £100,000 at 2% = £2,000
• Remaining £250,000 at 5% = £12,500

Total SDLT: £14,500

The same purchase with VAT

Now assume the seller has opted to tax. VAT at 20% is £100,000, so the consideration for SDLT is £600,000:

• First £150,000 at 0% = £0
• Next £100,000 at 2% = £2,000
• Remaining £350,000 at 5% = £17,500

Total SDLT: £19,500

The VAT added £5,000 to the stamp duty bill. You will reclaim the £100,000 of VAT. You will not reclaim the £5,000.

Why it bites harder than it looks

Because the top band is 5%, every pound of VAT on a purchase above £250,000 effectively costs you 5p in additional, unrecoverable stamp duty.

On larger transactions this stops being a rounding error. It is often the single strongest financial argument for establishing whether a TOGC is available.

The TOGC comparison

A successful transfer of a going concern takes the sale outside the scope of VAT. No VAT in the consideration means no additional stamp duty.

On a £2m let investment property, that is £20,000 of permanent saving — plus not having to fund £400,000 for a quarter. The conditions are strict, but the arithmetic justifies taking proper advice rather than assuming.

Scotland and Wales

The principle is consistent across the UK; the rates and thresholds are not. Run the numbers against the regime where the property sits.

Practical points

1. Enter the VAT-inclusive figure into any SDLT calculation.
2. Budget the extra stamp duty as a real cost, not a timing item.
3. Ask about TOGC on any let property, because the saving is permanent.
4. Check the current rates before relying on the bands above.
5. Remember leases are different. For rent, the calculation uses net present value, and VAT on rent is included in it.

This guide is general information, not tax advice. SDLT rates change and the treatment depends on the transaction — confirm the current position with your adviser.