Non-Residential SDLT 2026
Three bands only: 0% to £150k, 2% to £250k, 5% above. Same rates since March 2016. No surcharges for additional property, no non-resident surcharge, no FTB relief. Applies to shops, offices, warehouses, agricultural land, mixed-use, and any purchase of six-or-more dwellings.
Non-residential SDLT bands
Applies to all non-residential and mixed-use freehold purchases in England and Northern Ireland.
| Slice of purchase price | SDLT rate | Tax on the maximum slice |
|---|---|---|
| £0 to £150,000 | 0% | £0 |
| £150,001 to £250,000 | 2% | £2,000 |
| Above £250,000 | 5% | 5p per pound |
Source: GOV.UK non-residential SDLT rates. Effective from 17 March 2016 under section 127 Finance Act 2016, which converted non-residential SDLT from a slab to a slice tax.
Worked examples at common price points
| Purchase price | Non-residential SDLT | Residential standard SDLT | Difference |
|---|---|---|---|
| £150,000 | £0 | £500 | £500 saving |
| £250,000 | £2,000 | £2,500 | £500 saving |
| £500,000 | £14,500 | £15,000 | £500 saving |
| £1,000,000 | £39,500 | £43,750 | £4,250 saving |
| £2,000,000 | £89,500 | £151,250 | £61,750 saving |
| £5,000,000 | £239,500 | £511,250 | £271,750 saving |
The gap widens dramatically at high values because the 5% non-residential top rate caps the marginal rate, while residential SDLT has 10% and 12% bands. At £5m a non-residential purchase pays less than half the SDLT of a residential purchase.
What counts as non-residential
Under Section 116 of the Finance Act 2003, residential property is defined as a building used or suitable for use as a dwelling, plus its garden and grounds. Everything else is non-residential: shops, offices, warehouses, factories, agricultural land, woodland, pubs (where the licensee accommodation is incidental), hotels, most care homes, most pre-development land, and a freehold containing six or more dwellings purchased in a single transaction.
The six-or-more dwellings rule under section 116(7) treats a single purchase of six or more separate dwellings as a non-residential transaction, applying the lower three-band non-residential rates instead of the higher five-band residential rates. This is a major SDLT saving for build-to-rent funds and portfolio buyers. The threshold is six in a single transaction, with no minimum size or value requirement; common abuse routes (artificially fractionating into multiple smaller transactions to claim the relief, or bolting on a sixth small flat) are tackled by TAAR rules under section 75A FA 2003 and HMRC's SDLT Manual SDLTM30100.
The full HMRC guidance is in the SDLT Manual at SDLTM00370 (residential vs non-residential) and SDLTM30100 (six-or-more dwellings).
Mixed-use treatment and case law since 2018
If a property contains both residential and non-residential elements at the time of purchase, the whole property is treated as non-residential / mixed use and pays the lower three-band SDLT rates. This generates substantial savings at high values (e.g. £62k saving at £2m) and has driven a wave of borderline-mixed-use SDLT claims at HMRC since 2018.
The leading case is Hyman v HMRC [2021] UKUT 68 (TCC), where the Upper Tribunal confirmed that paddocks and grounds typical of a country house do not qualify as non-residential because they are part of the gardens and grounds of a dwelling. Subsequent cases (Goodfellow, Hartland, Faiers, Brown) have refined the test: to qualify for mixed-use, the non-residential element must have a separate identifiable commercial use, not merely an incidental purpose related to the dwelling. Stables in regular commercial livery use, a working farm with bona fide farming activity, or a working pub with a flat above can qualify; a paddock used only for the owner's horse, a small office in a converted outbuilding, or a treehouse will not.
For the detailed treatment see mixed-use SDLT. HMRC routinely challenges mixed-use claims and has won approximately 90% of cases since 2020, so the standard for evidence is high.
No surcharges on non-residential SDLT
The 5% additional-dwellings surcharge under Schedule 4ZA FA 2003 applies only to additional residential dwellings. A landlord buying a tenth shop, an investor buying a sixth office, or a fund acquiring fifteen warehouses pays the same 0/2/5% non-residential rates as a first-time commercial buyer. The HRAD surcharge is the single largest source of UK SDLT extra-revenue at around £2bn per year, and its complete inapplicability to non-residential is a meaningful structural difference.
The 2% non-UK resident surcharge under Schedule 9A FA 2003 also applies only to residential property. A non-UK resident buying a UK shop, office, warehouse, or farm pays the same SDLT as a UK resident. This makes non-residential UK property comparatively favourable for international investors versus residential, even before accounting for the absence of ATED on non-residential corporate holdings.
The 15% corporate flat rate under Schedule 4A FA 2003 also applies only to residential dwellings (the so-called “de-enveloping” charge). Commercial property held in offshore corporate structures pays standard non-residential SDLT rates with no penalty rate.
Commercial leasehold SDLT: the NPV calculation
For commercial leases granted at a rent, SDLT is calculated on the Net Present Value (NPV) of the rent over the term of the lease, plus SDLT on any premium paid. The NPV uses a 3.5% discount rate per HMRC SDLT Manual SDLTM13075. The NPV is then taxed using a separate two-band schedule: 0% up to £150,000 NPV, 1% above £150,000.
A typical 10-year commercial lease at £50,000 per year has an NPV of approximately £415,000, generating SDLT on rent of £2,650 (1% on £265,000). A 25-year lease at the same rent has an NPV of about £825,000, generating SDLT of £6,750. Add SDLT on any premium at the standard non-residential rates. The NPV calculation is set out in detail at SDLTM13075, and HMRC publishes an NPV calculator at GOV.UK.
For full detail see the dedicated commercial leasehold SDLT page.
Frequently Asked Questions
What are the non-residential SDLT rates in 2026?
0% to £150k, 2% to £250k, 5% above. Same since 17 March 2016 under section 127 FA 2016.
What counts as non-residential property?
Shops, offices, warehouses, agricultural land, woodland, hotels, care homes, most pre-development land, six-or-more dwellings purchased together. See section 116 FA 2003 and SDLTM00370.
When does a residential purchase become non-residential?
(1) Six or more dwellings; (2) Contains both residential and non-residential elements (mixed-use); (3) No longer suitable for use as a dwelling (uninhabitable, gutted, kitchen/bathroom removed).
Is there a non-resident or additional-property surcharge on non-residential SDLT?
No to both. Both surcharges apply only to residential.
How does non-residential SDLT compare to residential at £500k?
£14,500 non-residential vs £15,000 residential (£500 saving). The gap widens with price: £4,250 saving at £1m, £61,750 saving at £2m, £271,750 saving at £5m.
Does the 15% corporate rate apply to non-residential?
No. The 15% corporate flat rate under Schedule 4A FA 2003 applies only to residential dwellings. Commercial property held corporately pays standard non-residential SDLT.
Related guides
Not tax advice. Non-residential and mixed-use SDLT classification is fact-specific and frequently contested by HMRC. Always confirm with a qualified UK solicitor or chartered tax adviser, particularly on mixed-use claims at high values.