SDLT on commercial property changes in the budget


Surprise new SDLT rate changes for commercial property announced in 2016 budget. Julien Pritchard reviews today’s announcement.It came as a complete surprise to all property professionals that George Osborne announced a change to the rates of Stamp Duty Land Tax (SDLT) for commercial property in the 2016 budget on 16 March 2016.

The measure will have effect on and after 17 March 2016. Where contracts have been exchanged but transactions have not completed before 17 March 2016 purchasers will have a choice of whether the old or new structure and rates apply.

This measure does not apply in Scotland as SDLT was devolved to Scotland on 1st April 2015. This measure will apply in Wales until 1 April 2018, when SDLT will be devolved to Wales.

The measure changes the rules for calculating SDLT charged on purchases of non-residential properties and transactions involving a mixture of residential and non-residential properties. At present, for purchases of freehold, the assignment of an existing lease and for the upfront payment (premium) on a new leasehold transaction, SDLT is charged at a single percentage of the price paid for the property, depending on the rate band within which the purchase price falls.

On and after 17 March 2016, SDLT will be charged at each rate on the portion of the purchase price which falls within each rate band. The new rates and thresholds for freehold purchases and leases premiums are:

Transaction Value Band RatePercentage
£0 – £150,0000%
£150,001 – £250,0002%
£250,000 +5%

The measure may actually be good news for smaller commercial property transactions, However, it will prove more costly for larger transactions and rents, particularly in the city. The longer term impact of the measure will have to be assessed further down the line.

One commercial property client, Sisu Properties, would have been affected by the changes had it not been for the quick reaction to the news by his solicitor Keeley Miller on the day of the announcement. The CEO commented “I am so impressed that you were able to react quickly to the surprise announcement in the budget yesterday and pleased to save £40k in tax for the company.” 

Find out more

For advice on the implications these changes may have on your commercial property transaction contact Julien Pritchard on 01708 229444 who will be happy to explain the changes in more detail.

This article was written by Julien Pritchard, Head of our Commercial Property Department at Pinney Talfourd Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as at March 2016.


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