Stamp Duty Land Tax (SDLT) Hotels, Inns, Bed and Breakfast or similar establishments

A guide to paying Stamp Duty Land Tax on Hotels, Inns, Bed and Breakfast or similar establishments

Stamp Duty Land Tax
Stamp Duty Land Tax

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This feature is a follow up from our Guide to Paying tax on Airbnb / Holiday let properties.

HMRC’s Stamp Duty Land Tax (SDLT) manual (at SDLTM00365) says:

Cases involving bed and breakfast establishments or guest houses will be treated on their own merits. However, a bed and breakfast (B&B) establishment which has bathing facilities, telephone lines etc. installed in each room and is available all year round would be considered non-residential, in line with s.116(3)(f) which states that “a hotel or inn or similar establishment” is not used a dwelling.

Below is more details on Stamp Duty Land Tax (SDLT) rates depending on if the property is pure residential or non-residential and mixed land and property:

Residential property stamp duty land tax rates

What is a Residential property:
A) a building that is:
i) used as a dwelling, or
ii) suitable for use as a dwelling, or
iii) in the process of being constructed or adapted for such use,

and

land that is or forms part of the garden or grounds of a building within paragraph (a) (including any building or structure on such land),

OR

an interest in or right over land (such as a restrictive covenant) that subsists for the benefit of a building within paragraph (a) or of land within paragraph (b)’.

Building includes part of a building.

You usually pay Stamp Duty Land Tax (SDLT) on increasing portions of the property price when you buy residential property, for example a house or flat. SDLT only applies to properties over a certain value.

The amount you pay depends on:

  • when you bought the property
  • how much you paid for it

Use the SDLT calculator  to work out how much tax you’ll pay.

You must send an SDLT return if you pay more than £40,000 for a property – even if there’s no SDLT due. There are some exemptions.

Rates for a single property

You pay stamp duty at these rates if, after buying the property, it is the only residential property you own. You usually pay 3% on top of these rates if you own another residential property.

These rates also apply if you bought a property before 8 July 2020.

There were different thresholds and rates for residential properties from 8 July 2020 to 30 September 2021.

You can also use this table to work out the SDLT for the purchase price of a lease (the ‘lease premium’).

Property or lease premium or transfer valueSDLT rate
Up to £125,000Zero
The next £125,000 (the portion from £125,001 to £250,000)2%
The next £675,000 (the portion from £250,001 to £925,000)5%
The next £575,000 (the portion from £925,001 to £1.5 million)10%
The remaining amount (the portion above £1.5 million)12%

Example

In October 2021 you buy a house for £295,000. The SDLT you owe will be calculated as follows:

  • 0% on the first £125,000 = £0
  • 2% on the next £125,000 = £2,500
  • 5% on the final £45,000 = £2,250
  • total SDLT = £4,750

Use the SDLT calculator to work out how much tax you’ll pay.

Rates for non-residential and mixed land and property

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.

You must still send an SDLT return for most transactions under £150,000.

Non-residential property includes:

  • commercial property, for example shops or offices
  • property that isn’t suitable to be lived in
  • forests
  • agricultural land that’s part of a working farm or used for agricultural reasons
  • any other land or property that is not part of a dwelling’s garden or grounds
  • 6 or more residential properties bought in a single transaction

You pay residential SDLT rates on agricultural land if it’s sold as part of the garden or grounds of a dwelling, for example a cottage with fields.

A ‘mixed’ property is one that has both residential and non-residential elements, for example a flat connected to a shop, doctor’s surgery or office.

Use the SDLT calculator to work out how much tax you’ll pay.

Freehold sales and transfers

You can also use this table to work out the SDLT rate for a lease premium.

Property or lease premium or transfer valueSDLT rate
Up to £150,000Zero
The next £100,000 (the portion from £150,001 to £250,000)2%
The remaining amount (the portion above £250,000)5%

Example

If you buy a freehold commercial property for £275,000, the SDLT you owe is calculated as follows:

  • 0% on the first £150,000 = £0
  • 2% on the next £100,000 = £2,000
  • 5% on the final £25,000 = £1,250
  • Total SDLT = £3,250

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