Budget 2016 – SDLT on commercial property

Just over a year ago the Stamp Duty Land Tax (SDLT) system was changed substantially for residential properties with the introduction of new rates. The rates applied on a graduated basis rather than on the old slab system whereby whatever rate applied to the total value of the property was applied to the entire purchase price.

In the Budget, the Chancellor announced a similar reform to the SDLT rates for commercial property. The new tax regime came into effect on 17 March 2016 and introduced a zero rate band on purchases up to £150,000; a 2% rate on the next £100,000; and a 5% top rate above £250,000. The rates apply to the value of commercial property on a graduated basis in the same way as for residential properties.

As a result of these changes, buyers of commercial property worth up to £1.05 million will pay less in stamp duty. Where contracts had been exchanged but transactions have not completed before 17 March 2016 purchasers have a choice of whether the old or new structure and rates apply.

Stamp duty rates for leasehold rent transactions will also change, with a new 2% stamp duty rate on leases with a net present value over £5 million.

Source: HM Government | 17-03-2016

You should always take specific advice in relation to your own circumstances as this article can only provide a guide.