Stamp Duty on Mixed Use Property

When purchasing a property that consists entirely of residential property, it is usual to apply the SDLT residential rate of tax to the transaction, depending on the amount paid for the property.

Purchasing a property that consists of residential property and other land, is known as a “mixed-use” transaction.  Even if there is a small amount of non-residential property, HMRC will accept that it will still be treated as a mixed-use property provided the non-residential element is neither negligible nor artificially contrived.

A mixed-use transaction would include purchases of: a shop with a flat above; a pub; and a bed and breakfast establishment.  It also includes a building containing an area that is used as a dwelling and an area that is used solely for business purposes e.g. a house containing rooms in a house used as a dental surgery or a farmhouse with outbuildings used solely for farming purposes. 

When working out the SDLT charge for a mixed-use transaction, there is no need to split the values of the property into residential and non-residential elements.  

You can apply non-residential (or mixed) property SDLT rate to the whole transaction, with each rate applied to the portion of the amount paid for the property that falls within each rate band.

Non-residential (or mixed) property rates  

  Price or premium Rate of tax  

So much as does not exceed £150,000 SDLT of 0%  

So much as exceeds £150,000 but does not exceed £250,000 SDLT of 2%  

The remainder (if any) 5%

There have been recent cases where the Tax Tribunal have not accepted properties as being mixed-use where there is negligible/minimal non-residential use.  These cases included reference to properties that included: a public right of way; a public road; woodlands; and overhead electricity cables.