Mixed-Use Property SDLT
Commercial rates for properties with residential and business use.
In this article
What is Mixed-Use Property?
A mixed-use property combines residential and non-residential elements. Common examples:
- Shop with flat above
- Pub with living accommodation
- Office building with caretaker's flat
- Farm with farmhouse
- House with commercial workshop or studio
The Big Advantage
Mixed-use properties are taxed at commercial rates on the entire purchase - even the residential portion. This means lower rates and no additional property surcharge, potentially saving tens of thousands of pounds.
SDLT Rates Comparison
| Band | Mixed-Use Rate | Residential Rate |
|---|---|---|
| £0 - £150,000 | 0% | 0% (to £125k) |
| £150,001 - £250,000 | 2% | 2% |
| Over £250,000 | 5% | 5-12% |
| Additional property surcharge | None | +5% |
Example Savings
Scenario: Buying a shop with flat above for £500,000 as a second property
| If Treated As | SDLT Due |
|---|---|
| Residential (with surcharge) | £40,000 |
| Mixed-Use (commercial rates) | £14,500 |
| Saving | £25,500 |
What Qualifies as Mixed-Use?
HMRC looks at actual use, not just potential. The commercial element must be:
- Genuine: Actually used for business purposes
- Significant: Not just a token commercial use
- Part of the same transaction: Bought together
HMRC Scrutiny
HMRC actively investigates mixed-use claims. Things that raise red flags:
- • Claiming mixed-use but commercial part is unused
- • Converting to purely residential shortly after purchase
- • Very small commercial element (e.g., tiny office in large house)
- • No planning permission or business rates for commercial use
Common Mixed-Use Scenarios
| Property Type | Mixed-Use? | Notes |
|---|---|---|
| Shop with flat above | Yes | Classic example |
| Farm with farmhouse | Yes | Agricultural + residential |
| House with home office | Usually No | Office is incidental to dwelling |
| Pub with landlord flat | Yes | Commercial primary use |
| House with separate workshop | Maybe | Depends on business use |
Evidence You May Need
If claiming mixed-use treatment, keep evidence such as:
- Business rates bills for the commercial portion
- Planning permission showing mixed use
- Lease agreements for commercial tenants
- Business accounts showing trading from the premises
- Insurance documents covering commercial use
Emma Richardson, MRICS
Chartered Surveyor & Property Tax Specialist
Emma Richardson is a RICS-qualified Chartered Surveyor with over 12 years of experience in UK property taxation. She founded Stamp Duty Calculator to help buyers understand the complex world of property transaction taxes.