Advanced Taxation (UK) · Tax advantages and disadvantages of alternative courses of action

SDLT on Non-Residential Property and Stamp Duty on Shares

Updated 11 October 2026 · Fact-checked

SDLT on non-residential property is a banded (progressive) tax on the purchase price: 0% to £150,000, 2% on £150,001 to £250,000 and 5% above that. Stamp duty on shares is 0.5% of the price paid. Both are costs of the buyer, and you include them when comparing courses of action.

Understand Stamp Taxes: SDLT on Non-Residential Property and Stamp Duty

Stamp taxes are transaction taxes. They are charged on the buyer, not the seller, and they are a real cost that reduces the benefit of a plan. In ATX-UK you rarely compute them in isolation. You add them to a comparison, for example buying a commercial building or buying shares in a company.

Stamp duty land tax (SDLT) applies to purchases of land and buildings. For non-residential property the rates apply in bands, like income tax. Only the part of the price inside each band is taxed at that band's rate. The tax tables give 0% up to £150,000, 2% from £150,001 to £250,000 and 5% above £250,000.

Stamp duty applies to a transfer of shares. The rate is 0.5% of the consideration. The buyer pays it. It does not apply to the seller, and it is not a capital gains cost for the buyer in the way you might first think: it is part of the buyer's acquisition cost and so is deductible when the buyer later sells.

The key skill is spotting where the charge arises. An incorporation of a business that transfers a commercial building to a new company can bring SDLT on the value given. A company buying the shares of another company brings stamp duty. Where no price or value passes, such as a pure gift, check the question for any consideration before charging anything.

The exam asks you to identify the charge, calculate it with the tables, and say who pays and when it matters to the decision. Always state the cost clearly so the client can weigh it against other savings.

Key rules to remember

SDLT on non-residential property (bands): 0% × first £150,000 + 2% × (£150,001 to £250,000) + 5% × excess over £250,000; Banded, so only the slice in each band is taxed at that rate. Use the figures in the tax tables provided.
SDLT where price is £250,000 or less: SDLT = 2% × (price − £150,000); Applies when the price is above £150,000 and no more than £250,000. Maximum SDLT in this range is £2,000.
SDLT where price is above £250,000: SDLT = £2,000 + 5% × (price − £250,000); £2,000 is 2% of the £100,000 band. Add 5% of the excess.
Stamp duty on shares: Stamp duty = 0.5% × consideration; Paid by the buyer. Use the price actually paid for the shares.
Effect on later gain: Buyer's CGT acquisition cost = price + stamp taxes paid; Stamp taxes paid on acquisition are an incidental cost of acquiring the asset.

How to solve Stamp Taxes: SDLT on Non-Residential Property and Stamp Duty questions

Use this method for any question that asks you to bring stamp taxes into a transaction or compare two courses of action.

1Identify the asset being acquired: non-residential land and buildings, or shares.
2Identify the buyer, because the buyer bears the charge, and find the consideration or value on which the tax is based.
3For land, split the price into the 0%, 2% and 5% bands using the tax tables and compute the tax on each band.
4For shares, multiply the consideration by 0.5%.
5Add the tax to the cost of each course of action so you compare like with like.
6State the effect on later gains, because stamp taxes paid on acquisition are part of the buyer's cost.
7Conclude with a reasoned recommendation, noting that stamp taxes may be a deciding or minor factor.

Quickest way: Band-slice shortcut for SDLT

When to use it: Use this when you have a single non-residential purchase price and little time.

If the price is £150,000 or less, the SDLT is nil.
If it is between £150,001 and £250,000, take 2% of the amount above £150,000.
If it is above £250,000, start with £2,000 and add 5% of the amount above £250,000.
For shares, multiply the price by 0.5% and write the answer on its own line.
Show the working in one line per band so marks are awarded even if the arithmetic slips.

Common mistakes in Stamp Taxes: SDLT on Non-Residential Property and Stamp Duty

Applying one rate to the whole price, for example 5% × the full purchase price.
Students treat SDLT like a flat tax instead of a banded (progressive) tax.
Fix: Treat the bands like income tax bands. Only the slice within each band is taxed at that rate.
Charging stamp duty on shares to the seller.
Students assume the seller bears all transaction costs.
Fix: Stamp duty is paid by the buyer. The seller bears none and may take it into account only in price negotiation.
Using the wrong rate, such as 1% or 2% for shares.
Rates are confused with other taxes or with older rates.
Fix: Take the rate from the tax tables provided: 0.5% for stamp duty on shares.
Ignoring stamp taxes in a comparison of alternatives.
Students focus on income tax, CGT and IHT and forget transaction costs.
Fix: Add a separate line for stamp taxes under each option, even if the amount is small or nil.
Forgetting that stamp taxes paid increase the buyer's cost for a later disposal.
The charge is seen as an expense that disappears.
Fix: Add the tax to the acquisition cost when computing a later gain.
Applying the non-residential SDLT bands to residential property.
Students see 'SDLT' and pick the first table they remember.
Fix: Check the property type. The tables in this guide cover non-residential property only.

Worked examples

Example 1

Bright Ltd buys a freehold office building for £420,000. Calculate the SDLT payable.

Show the solution

Band £0 to £150,000 at 0%: £150,000 × 0% = £0.
Band £150,001 to £250,000 at 2%: £100,000 × 2% = £2,000.
Band above £250,000 at 5%: (£420,000 − £250,000) = £170,000 × 5% = £8,500.
Total SDLT = £0 + £2,000 + £8,500 = £10,500.

Answer: SDLT payable is £10,500.

Example 2

Mala is deciding between two ways of buying a business. Option 1: her company buys the trade and a freehold warehouse from the seller, with the warehouse valued at £300,000. Option 2: her company buys all the shares of the seller's company for £600,000. Compare the stamp taxes only on each option. In option 1, calculate SDLT on the land element (the warehouse) only and ignore the other assets, such as goodwill, as the question instructs.

Show the solution

This is a comparison of stamp taxes only. It is not a full like-for-like comparison, because option 1 buys a trade and assets while option 2 buys a company.
Option 1: SDLT on the warehouse of £300,000.
£150,000 × 0% = £0.
£100,000 × 2% = £2,000.
£50,000 × 5% = £2,500.
SDLT = £4,500.
Option 2: stamp duty on shares = £600,000 × 0.5% = £3,000.
Compare: option 1 costs £4,500 and option 2 costs £3,000, so option 2 is £1,500 cheaper on stamp taxes alone.
Note that stamp taxes are only part of the decision. Other factors, such as the availability of capital allowances and the buyer's exposure to the company's past liabilities, also matter. The stamp tax paid is an incidental cost of acquisition: in option 1 it adds to the cost of the warehouse, and in option 2 it adds to the cost of the shares.

Answer: Option 1: SDLT £4,500 (on the land element only). Option 2: stamp duty £3,000. On stamp taxes alone, option 2 is £1,500 cheaper, but other tax and commercial factors should be weighed before recommending it.

Exam tips

Copy the three SDLT bands and the 0.5% share rate from the tax tables at the start, so you use the right figures.
Show one line per band. Markers award method marks even when a number is wrong.
Say who pays. The buyer pays both SDLT and stamp duty on shares.
In comparison questions, give stamp taxes their own line under each option and then add the totals.
Link the answer to the client's objective, such as cost saving or cash flow, to earn professional skills marks.

Practice questions from Tax advantages and disadvantages of alternative courses of action

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Stamp Taxes: SDLT on Non-Residential Property and Stamp Duty: frequently asked questions

What are the SDLT rates for non-residential property in ATX-UK?

The tax tables give 0% up to £150,000, 2% on the part from £150,001 to £250,000 and 5% on the part above £250,000. The rates apply to each slice of the price, not to the whole price.

What is the rate of stamp duty on shares?

The tax tables give a rate of 0.5%. It is charged on the consideration paid for the shares and is borne by the buyer.

Do stamp taxes apply when a business is incorporated?

They can. If a commercial building is transferred to the new company for consideration, SDLT can arise on the value given. If shares are transferred for a price, stamp duty can arise. Read the question for what is actually transferred and what is given in return.

Can stamp taxes be deducted when the asset is sold later?

They are part of the buyer's cost of acquiring the asset. This means they are taken into account when computing a later gain on the disposal, rather than being deducted from income.