Budget Announcement Creates Commercial Property Stamp Duty Rate Shake-Up


The Budget 2016 was held yesterday, and although you’ve probably heard about Jamie Oliver lingering outside parliament just in case his suggested ‘sugar tax’ came into action, there was much bigger news for commercial property investors.

New Stamp Duty Rates for Commercial Property Purchases

Chancellor Osborne declared there will be new stamp duty rates for commercial property purchases put in place in what he called “a big tax cut for small firms”.

The way stamp duty on freehold and leasehold properties is charged will be changed so it is billed in a similar way to the new residential property stamp duty system. Stamp duty will no longer be charged on the whole transaction value, but just on the value above each tax band.

There will also be a zero rate for properties costing up to £150,000 and a lower rate for commercial property costing up to £1.05million.

How Much Will the New Stamp Duty Rates Be?

The amount of stamp duty owed will depend on the purchase price of the commercial property. The charges are as follows:

Under £150,000 – 0%

£150,001 to £250,000 – 2%

Above £250,000 – 5%

Leasehold stamp duty rates will also be updated with 2% being charged on leases with a current value over £5million.

Why the Change?

Under current stamp duty regulations, a property could increase in value by as little as £1 and cost the purchaser three times the amount in tax. These new changes will stop this.

Osborne explained “These reforms raise £500m a year. And while 9 per cent will pay more; over 90 per cent will see their tax bills cut or stay the same.

“So, if you buy a pub in the Midlands worth, say, £270,000, you would today pay over £8,000 in stamp duty. From tomorrow you will pay just £3,000.

“It’s a big tax cut for small firms. All in a Budget that backs small business.”

What Does This Mean for Property Investors?

These new changes mean that investing in commercial property is now more affordable than ever and therefore is likely to become even more popular with anyone looking to invest in physical assets.

So, if you would like to learn more about your finance options for purchasing commercial property, contact our experienced financial brokers on 02920 766 565 to request a call back today.

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