• 01 Apr 2016
  • jane.potter

SDLT – commercial

Stamp duty land tax (SDLT) was reformed for residential property purchases from 4 December 2014, this month it was the turn of SDLT on commercial properties to be shaken up. For property deals completed before 17 March 2016, SDLT is charged at a single rate on the whole price paid for the property, under the so-called ‘slab’ system. For property completions on and after 17 March 2016 the SDLT charge will be calculated according to the value falling within each of these bands:

Transaction value Rate of SDLT
Up to £150,000 0%
Up to £150,001 – 250,000 2%
Over £250,000 5%

Where the property is leasehold, SDLT is calculated on the basis of the net present value of the rents. The new bands and rates are:

Net present value of rent Rate of SDLT
Up to £150,000 0%
Up to £150,001 – 500,000 1%
Over £500,000 2%

Purchasers who exchanged contracts before 17 March 2016 but complete the deal after that date will have a choice whether they pay SDLT on a purchase of a commercial property under the new or the old rules.

These changes to SDLT don’t apply to properties in Scotland where Land and Buildings Transaction Tax (LBTT) is set by the Scottish Government.

Business rates

Businesses who trade out of modest premises will pay zero business rates from 1 April 2017, as properties with rateable value (RV) of £12,000 or less will qualify for 100% small business rate relief (SBRR). Where the RV is over £12,000 but no more than £15,000 a tapered SBRR will apply. The small business rate (48.4p for 2016-17) will apply where the RV is no more than £51,000.

The Government is also consulting on how to make business rate valuations at three yearly intervals instead of the current five year period.

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