Budget 2016: Government reforms commercial stamp duty

Ryan Bembridge

March 16, 2016

Commercial stamp duty has been reformed from a slab to tiered structure, Chancellor George Osborne has announced in today’s Budget.

There will be a zero rate band for purchases up to £150,000, 2% on the next £100,000 and a 5% rate above £250,000. The change will be active from midnight.

The Chancellor said the International Monetary Fund advised bringing commercial stamp duty in line with residential, which was reformed from a slab to tiered structure in the 2014 Autumn Statement.

Osborne said: “Just over a year ago I reformed residential stamp duty. We moved from a distorted slab system to a much simpler slice system. As a result 90% of homebuyers are paying the same or less and revenues from the expensive properties have risen.

“The IMF welcomed the changes and suggest we do the same for commercial property. So that’s what we’re going to do and in a way that helps our small firms. At the moment a small firm can pay just £1 more for a property and face a tax bill three times as large.

“That makes no sense, so from now on commercial stamp duty will have a zero rate band on purchases up to 150,000, a 2% on the next £100,000 and a 5% top rate above £250,000.

“There will also be a new 2% rate on those high value leases with a net present value above £5m.”

Osborne added the reforms will raise £500m a year, with 9% paying more but over 90% seeing their tax bills cut or staying the same.

Previously commercial stamp duty had fixed bands between 0% and 4%.

Osborne also talked about the 3% stamp duty surcharge coming into force from April 1. The government previously signalled that investors with more than 15 properties will not pay the 3% stamp duty surcharge.

But the Chancellor added: “I’ve listened to colleagues and the rates will apply to larger investors too. We are going use receipt to support community housing trusts, including £20m to help young families onto the housing ladder in the South West of England.”

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