If you’re planning to purchase a commercial property, your immediate concerns may be finding the correct location and staying within your allocated budget. However, stamp duty land tax is another crucial consideration with this kind of transaction – but what exactly makes it so important?
Stamp duty land tax is the sum levied on property purchases depending on their exact value. This can vary from nothing at all, to four per cent of the building’s total worth.
Indeed, structures valued at £500,001 or over typically require a four per cent stamp duty land tax, while those between £250,001 and £500,000 carry a three per cent levy. At the lower end of the scale, a one per cent tax is added to properties worth from £150,001 to £250,000 – but none is added for buildings valued below £150,000 or with annual rents lower than £1,000.
These costs can therefore be high, which is why stamp duty planning is so important. Careful preparation can in fact save you significant sums of money – something that has the potential to make all the difference when starting out on a business venture.
So, what are the first things to consider when looking at the stamp duty on commercial property?
It is crucial to be aware of what the HMRC classes as commercial properties and what it does not. Essentially, commercial properties are defined as those used for non-residential purposes, whether they are something you would generally expect – such as offices – to those that could be more ambiguous, like farm buildings.
Next, it’s important to review the various planning options available to you – and there are several points you can keep in mind to help ensure you get the best deal possible.
When you begin investigating the choices on offer, it can help to have a general idea of how much you can expect to pay. A stamp duty land tax calculator could allow you to get a picture of the figures you are likely to be looking at.
Having the ability to dramatically mitigate the cost of stamp duty, providers should be able to demonstrate that they have plenty of experience in this field. Indeed, with large sums at stake, it is essential that you select a company that can be trusted to implement the planning to your greatest financial advantage.
When looking into providers, you should check that they are 100 per cent successful with HMRC inquiries, as well as investigating whether they provide the planning solutions themselves or if this is in fact conducted by another organisation altogether.
Meanwhile, the scheme should not have an impact on your ability to successfully obtain a mortgage, while the option to purchase insurance can also be desirable – whether this is a path you are keen to go down or not.
Being mindful of all these factors can allow you to save significant sums on your property purchase, something that can prove a huge boon whether you are just starting out with your business, undergoing an expansion or simply moving to pastures new.
So, when you are looking for a new property, remember that the old maxim of location, location, location is not the only thing to consider before signing on the dotted line.
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