Mixed Use Stamp Duty Refunds

In this article, you will find out more about Stamp Duty Land Tax (SDLT) for mixed use property purchases.

Mixed Use Stamp Duty
Mixed use stamp duty: what qualifies as a mixed use property and how does it affect SDLT?

(4 minute read)

Following up on last week’s topic, in today’s Tax Tip we cover the topic of stamp duty in mixed use properties. 

We will cover:

  • What is residential, non-residential and mixed use property
  • How mixed use property affects SDLT

What is Stamp Duty? And who is eligible?

Stamp Duty Land Tax (SDLT) is an amount you pay upon the purchase of property and its land.  

You must pay Stamp Duty if the property exceeds the threshold amount. 

The current threshold for residential properties is £125,000. 

The threshold for non-residential properties and land is £150,000. 

It is applicable to all property buyers, in the purchase of residential and non-residential properties, with a few exceptions.  

We’ve already covered a few situations in which to claim stamp duty relief, such as being a first-time buyer and buying properties with an annexe. 

You may also be eligible for stamp duty refunds if the property is dilapidated and not suitable for living conditions, and when purchasing it from representatives of deceased individuals. 

What is mixed use property? 

To understand mixed use property stamp duty, let’s first go over the concept of residential and non-residential. 

Residential property is a building that is suitable for dwelling or, in other words, for adequate living conditions. This also includes the land that surrounds the building, such as a garden. 

Non-residential property or land includes all other uses, such as agricultural, commercial, among others. 

Mixed property is a mix between residential and non-residential property. 

Therefore, mixed property SDLT applies when purchasing residential and non-residential property in the same transaction. 

Mixed use rate for SDLT 

So, as a property purchaser, you may be wondering if there are cases in which you can claim a refund of SDLT, if HMRC deems your property as mixed use. 

The answer is yes, if the property is also used for commercial purposes. Here are some examples: 

  • A property is surrounded by paddocks, which are made accessible for a farmer to use; 
  • Utility companies install equipment on the land that the property is on; 
  • The same building is used for both residential and non-residential purposes, such as, when it is both used as a dwelling, and as a business (for example, a house that is attached to a shop). 

Therefore, in these cases, property purchasers are liable for a lower SDLT rate because the property is not used entirely for residential purposes. 

Lower SDLT rate for mixed use properties 

When you buy a house, you usually pay between 2-15% on SDLT, if it’s a residential property. 

But mixed use property is not fully used for residential purposes, as we have seen from the examples above. Because of this, non-residential rates are applied, which have a higher zero threshold. 

According to HMRC, “You pay SDLT on increasing portions of the property price (or ‘consideration’) when you pay £150,000 or more for non-residential or mixed (also known as ‘mixed use’) land or property.” 

The non-residential rates apply for mixed-use properties, which could save you thousands of pounds when claiming Stamp Duty relief. 

Find out how much you have to pay

With all this in mind, it might be useful to have a look at the government’s SDLT calculator. However, the numbers will not take your specific situation into account. 

Your best bet is to speak to specialised tax advisors, such as our team at Tax Expert. We are here to help you understand about SDLT and make a claim on your behalf, so don’t hesitate in calling us. 

Contact us today at 01772 788200 to find out more about how we can help, or WhatsApp us out-of-hours at 07787 010190. Sending an e-mail is simple too, just fill out the short form below and we’ll get back to you!

Kind regards Ilyas