Three different taxes, three different revenue authorities, three different sets of thresholds. Figures do not transfer across borders, and the differences are large enough to matter to a budget.
Which tax applies where
| Nation | Tax | Collected by |
|---|---|---|
| England and Northern Ireland | Stamp Duty Land Tax (SDLT) | HMRC |
| Scotland | Land and Buildings Transaction Tax (LBTT) | Revenue Scotland |
| Wales | Land Transaction Tax (LTT) | Welsh Revenue Authority |
Scotland replaced SDLT with LBTT in April 2015. Wales replaced it with LTT in April 2018. Northern Ireland remains within the SDLT system alongside England.
Check the current rates before you budget
This page explains how the three taxes work rather than reproducing rate tables, because thresholds change at each Budget and a stale table is worse than none. For current rates and official calculators:
- England and Northern Ireland (SDLT): GOV.UK: Stamp Duty Land Tax
- Scotland (LBTT): Revenue Scotland: Land and Buildings Transaction Tax
- Wales (LTT): Welsh Revenue Authority: Land Transaction Tax
Each publishes its own calculator. Your solicitor will confirm the figure for your transaction.
The point that matters most: you are non-residential
Practice premises, surgeries, clinics, pharmacies and care homes are non-residential property. Non-residential rates are lower than residential rates and, importantly, carry none of the additional dwelling surcharges that apply to second homes and buy-to-let.
This is worth stating because buyers who have only ever bought residential property arrive with residential assumptions and budget too much, or occasionally too little, having assumed relief that does not exist.
Mixed-use is usually treated as non-residential
A common situation: a practice or pharmacy on the ground floor with a flat above. Where a property contains both residential and non-residential elements, the transaction is generally taxed under the non-residential rules as a whole.
That can produce a substantial saving compared with residential treatment, particularly at higher values. It is worth confirming with your solicitor early, because it may change what you can afford to offer.
All three are calculated on a slice basis
Each portion of the price is taxed at the rate applying to that band, not the whole price at the top rate. A £1 increase in price never pushes the entire sum into a higher bracket.
Buyers frequently believe otherwise and negotiate around thresholds that do not behave the way they think.
Leases are taxed separately, and it catches people out
If you are taking a new lease rather than buying a freehold, tax is calculated on the Net Present Value of the rent payable over the term. That is not simply the annual rent multiplied by the years, but a discounted calculation.
Two things follow. First, a long lease on a decent rent can produce a meaningful tax bill that a first-time practice buyer has not budgeted for. Second, any premium paid for the lease is taxed separately from the rent element.
Scotland has an additional trap. Commercial leases require LBTT returns every three years during the lease term, and if rent has increased, further tax may be due. There is no equivalent obligation in England, Northern Ireland or Wales. Practices that take a Scottish lease and file once frequently forget the recurring obligation entirely.
Timing
SDLT returns must be submitted to HMRC within 14 days of completion. LBTT and LTT have their own deadlines. In practice your solicitor handles the filing, but the money has to be available at completion; it is not something that can be added to the mortgage.
What this means for your funding
Property tax is a completion cost, not a borrowing cost. It comes out of your cash alongside legal fees, valuation fees and lender arrangement fees, and it cannot generally be borrowed against the property being purchased.
Size your deposit and your working capital accordingly. Running short at completion because the tax was underestimated is avoidable and unpleasant, and it happens most often to buyers whose only previous experience is residential.
Get proper advice
We are commercial finance brokers, not tax advisers. This page explains the structure so you know what questions to ask; it is not tax advice and should not be relied on as such.
Property tax on a practice purchase interacts with how you hold the property, whether a partnership or a company is buying, and what reliefs might apply. Take advice from your accountant or a solicitor before you commit to a structure.
Related: commercial mortgages and buying a practice in Scotland.
All figures are indicative and subject to lender assessment, your circumstances, valuation and prevailing market conditions. Commercial mortgages and unregulated bridging loans are not regulated by the Financial Conduct Authority. Property offered as security may be at risk if you do not keep up repayments.