The Rent Review Specialist
SDLT
SDLT (replaces Stamp Duty) may become payable when all or part of an interest in land or property is transferred from one person to another if anything of monetary value is given in exchange. Anything of monetary value that is given in exchange for the property is referred to as the 'consideration'. This can be cash or another type of payment. It can also include the value of any outstanding mortgage that the buyer takes over. SDLT may be charged on the consideration.
SDLT may also be payable on the purchase price/lease premium of commercial property. At present, the rate up to £150,000 (rent under £1000 pa), is zero; up to £150,000 (annual rent £1000 or more) rate is 1%, over £150,000 to £250,000, rate is 1%, over £250,000 to £500,000 rate is 3%, over £500,000 rate is 4%
With a new lease, SDLT may be payable either on the amount of the premium or the amount of any rent due (over the term of the lease). Generally, on grant of lease, the tenant pays the SDLT. However, the effect of the amount of SDLT may figure in the negotiations.
HMRC has produced a Stamp Duty Land Tax Calculator. The calculator can be used for residential property or non-residential property.
The link is http://www.hmrc.gov.uk/tools/sdlt/land-and-property.htm
Effective 1 April 2018 (not an April Fool joke), Wales has Welsh Land Transaction Tax (LTT) instead of SDLT. Similar to SDLT, the tax (applying to transactions of Welsh land with an effective date on or after 1 April 2018) has some key differences. In addition to rates and bands being slightly different, there are differences in detail so it is important to check the LTT legislation when dealing with land in Wales.
Tax relief for capital allowances - plant and machinery, including landlord’s fixtures and fittings - requires specialist advice.
VAT:
Land and buildings, such as freehold sales, leasing or renting, are normally exempt from Value Added Tax (VAT). (For VAT purposes, the definition of “land” includes buildings.)
It is possible to opt to tax a commercial property for VAT, in which case VAT would be added to the rent(s) and any VAT on allowable management expenses reclaimable.
It is not compulsory to opt to tax a commercial property for VAT, but if you do then you would have to keep proper accounting records to satisfy compliance with HMRC. Once registered, it is only possible to deregister after you have owned the property for at least 20 years. If you sell the property then the buyer can deregister if he wants.
Regardless of any VAT registration threshold (based on turnover), some types businesses are unable to recover part or all VAT on their business expenditure: for example, banks, betting offices, funeral directors. If you have a property let to a bank, it is generally better to not opt to tax the property because the tenant would otherwise not be able to recover all the VAT, which means the property would be more expensive to lease.
Residential property is normally exempt from VAT so if for example there is a flat above the shop but the whole of the property is let to the shop tenant then the landlord would have to apportion the amount of rent attributable to the flat and not charge VAT on that amount.
You can find out more about opting to tax land and buildings by visiting HMRC website,
SDLT may also be payable on the purchase price/lease premium of commercial property. At present, the rate up to £150,000 (rent under £1000 pa), is zero; up to £150,000 (annual rent £1000 or more) rate is 1%, over £150,000 to £250,000, rate is 1%, over £250,000 to £500,000 rate is 3%, over £500,000 rate is 4%
With a new lease, SDLT may be payable either on the amount of the premium or the amount of any rent due (over the term of the lease). Generally, on grant of lease, the tenant pays the SDLT. However, the effect of the amount of SDLT may figure in the negotiations.
HMRC has produced a Stamp Duty Land Tax Calculator. The calculator can be used for residential property or non-residential property.
The link is http://www.hmrc.gov.uk/tools/sdlt/land-and-property.htm
Effective 1 April 2018 (not an April Fool joke), Wales has Welsh Land Transaction Tax (LTT) instead of SDLT. Similar to SDLT, the tax (applying to transactions of Welsh land with an effective date on or after 1 April 2018) has some key differences. In addition to rates and bands being slightly different, there are differences in detail so it is important to check the LTT legislation when dealing with land in Wales.
Tax relief for capital allowances - plant and machinery, including landlord’s fixtures and fittings - requires specialist advice.
VAT:
Land and buildings, such as freehold sales, leasing or renting, are normally exempt from Value Added Tax (VAT). (For VAT purposes, the definition of “land” includes buildings.)
It is possible to opt to tax a commercial property for VAT, in which case VAT would be added to the rent(s) and any VAT on allowable management expenses reclaimable.
It is not compulsory to opt to tax a commercial property for VAT, but if you do then you would have to keep proper accounting records to satisfy compliance with HMRC. Once registered, it is only possible to deregister after you have owned the property for at least 20 years. If you sell the property then the buyer can deregister if he wants.
Regardless of any VAT registration threshold (based on turnover), some types businesses are unable to recover part or all VAT on their business expenditure: for example, banks, betting offices, funeral directors. If you have a property let to a bank, it is generally better to not opt to tax the property because the tenant would otherwise not be able to recover all the VAT, which means the property would be more expensive to lease.
Residential property is normally exempt from VAT so if for example there is a flat above the shop but the whole of the property is let to the shop tenant then the landlord would have to apportion the amount of rent attributable to the flat and not charge VAT on that amount.
You can find out more about opting to tax land and buildings by visiting HMRC website,