Budget 2016 - Commercial Property

The Budget was announced today and in the commercial property world, Stamp Duty Land Tax (SDLT) rates have changed to a ‘slicing’ regime akin to the existing residential property regime.  Previously the regime worked on a ‘slab’ system, with one rate of tax applying to the whole of the purchase price or lease premium, meaning that an increase of £1 could potentially push the entire purchase price or lease premium into the next band up.

The system will now work as follows:

Rates on purchase values and lease premiums:-

  1. Up to £150,000 – 0%
  2. For the ‘slice’ between £150,000 - £250,000 – 2%
  3. The remaining consideration over £250,000 – 5%

Whereas bigger businesses purchasing the higher value freeholds and leases make a larger contribution, this will work in favour of small business who will save money on property purchases and lease premiums, compared to the old regime. 

A new 2% rate on Net Present Value (NPV) over £5 million on commercial leases will now also apply from midnight tonight, which is an increase from 1%.

These changes take effect from midnight tonight but for those transactions that have already exchanged contracts, transitional provisions will apply, ensuring such taxpayers will not be prejudiced.

For more information on any of the issues above, give one of our Commercial Property experts a call on 0113 201 4900 for a free, initial consultation.

Kelly Sanderson

Written by

Kelly Sanderson

Head of Commercial

Kelly has many years of experience in dealing with all aspects of commercial property law; acting for individuals, companies, pension funds, partnerships and their lenders in the purchasing, selling and leasing of commercial property.  Kelly also specialises in business sales and purchases (whether by way...

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