Stamp taxes on a pub purchase

Which tax applies and at what rates

A stamp tax is charged whenever you buy an interest in land or property, and a pub is no exception. Which tax applies depends on where the pub is. In England and Northern Ireland it is stamp duty land tax, SDLT, collected by HMRC. In Scotland it is land and buildings transaction tax, LBTT, collected by Revenue Scotland. In Wales it is land transaction tax, LTT, collected by the Welsh Revenue Authority. All three charge a pub at their non-residential, or mixed-use, rates rather than the residential rates, because a pub is a commercial trading property.

This guide explains how the charge fits into funding a pub purchase. It is not tax advice. Rates, bands and reliefs change from year to year and differ across the three tax regimes, so always confirm the exact figures with a solicitor and an accountant before you commit, and budget on the current published rates.

The non-residential rates are charged on a slice basis, with each band of the price taxed at its own rate, so the effective rate rises with the price. Because a pub usually includes living accommodation as well as trading space, it is treated as mixed-use and taxed at the non-residential rates rather than the higher residential rates that apply to a pure dwelling, which generally works in a buyer's favour. The precise calculation is straightforward once the taxable amount is known, and a solicitor will compute and submit it as part of completion.

Why the goodwill split matters

When you buy a pub as a going concern you are not only buying the property. The price is typically split between the property and fixtures, the goodwill of the established trade, and the loose trade stock such as the drinks in the cellar. The stamp tax is charged on the property and fixtures, not on the goodwill or the stock, so how the total price is apportioned between these elements affects the tax payable. A larger goodwill element reduces the taxable property figure, but the apportionment must be genuine and defensible, reflecting real value, not a device to cut the tax.

The apportionment also matters beyond the stamp tax, because it affects how the buyer accounts for the purchase, what can be claimed as capital allowances on qualifying fixtures, and the seller's own tax position. This is why the goodwill split is negotiated and documented carefully rather than left as a single headline figure. We flag it early so it is dealt with by your advisers in good time, because it influences both the tax and the cash you need at completion.

Asset purchase or share purchase

How you buy the pub changes the tax. In an asset purchase you buy the property, goodwill and assets directly, and the stamp tax is charged on the property element as described above. In a share purchase you instead buy the shares of the company that already owns the pub, so the property does not change hands; the company keeps owning it and you own the company. A share purchase is charged to stamp duty on shares at a different, generally lower rate than the property tax, but it brings the company's history, liabilities and tax position with it.

Neither route is automatically better. A share purchase can reduce the stamp tax and preserve certain arrangements, but the buyer inherits the company's past, so it needs careful due diligence and warranties. An asset purchase is cleaner, leaving the seller's history behind, but the property tax applies in full. The right choice depends on the specific deal, the company behind the pub and advice from your accountant and solicitor. We work the funding around whichever structure your advisers recommend.

How the tax affects the cash you need

The stamp tax is a real cash cost at completion that sits on top of your deposit, and it is not usually something a lender will fund, so it must come from your own resources. When we size a deal we set it out alongside the deposit, the arrangement and valuation fees, the legal costs and the working-capital buffer, so you arrive at completion fully funded. Underestimating the stamp tax is a common cause of a last-minute shortfall, particularly on a higher-priced pub where the upper bands bite.