Stamp Duty on a commercial building

[dstewart12]

Hello, we are at the offer stage of buying some holiday apartments valued at 285K. I was told by the seller that we would only have to pay stamp duty of 1 percent because that only covers the bricks and morter of the building of 2490K and the other 36K is for fixtures and fittings and business good will.

Is that true, or is stamp duty on what the actual building sells for ie 285K and therefore 3%?

Any help would be much appreciated.

[AvocadoK]

Strictly speaking, we are talking about stamp duty land tax (SDLT), not stamp duty, though people often use the terms interchangeably.

It is true that there is no stamp duty land tax on fixtures and fittings and business goodwill. However, the purchase price must be apportioned on a reasonable basis - the Revenue won't necessarily accept the apportionment agreed between buyer and seller. And giving a value to goodwill in the case of holiday lets is pretty contentious.

In the end, it is you (or your solicitor on your behalf) that signs the Land Transaction Return and pays the SDLT. The Revenue can query it if they wish and will assess you to the extra SDLT, interest and penalties if it is found that the apportionment of the purchase price was wrong.

[jetrimby]

HI agree with comments above also would add that goodwill is treated by the Revenue as attaching to the property rather than the business it self in this and many property based businesses(if you think about it as if the current traders moved to a different part of the country would all the customers follow them or did they like the location/property?) If the latter, which is the more likely, the Revenue are going to want the goodwill added to the property value rather standing seperately. The normal arguements about goodwill valuation will not apply here as once you had won they would just add it back to the property value.

[section 44]

The above answers are wrong with regards to fixtures.

As a matter of property law a fixture (something that becomes annexed to the land) is part of the land. Consequently a fixture is liable to SDLT.

Moveable property and chattells are not liable to SDLT but these are different, as a matter of law, to fixtures.