Budget reforms stamp duty on commercial property

Budget reforms stamp duty on commercial property

The government will reform Stamp Duty Land Tax (SDLT) on non-residential property transactions.

Currently, SDLT rates on freehold and lease premium transactions operate on a slab system, where one tax rate is due on the entire transaction value.

This Budget announced yesterday sets out that these rates will be reformed to a slice system (similar to residential property), so that SDLT is payable on the portion of the transaction value which falls within each tax band. 

The new rates will be 0% for the portion of the transaction value between £0 and £150,000; 2% between £150,001 and £250,000; and 5% above £250,000. 

This means that all freehold and lease premium transactions below £1.05m will pay the same or less in SDLT, however a transaction at £5m for example will now attract £239,500 SDLT as appose to £200,000 under the previous structure. 

These changes will take effect on 17 March 2016. For those transactions which have already exchanged contracts but not completed when the changes come into force, transitional rules will ensure taxpayers will not lose out. 

We believe that these changes will not impact substantially on transaction liquidity or market sentiment, and create a fairer structure for lower value transactions which will assist small business.



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