Good news on Commercial Stamp Duty

Stamp Duty changes for Commercial Property

Good news for commercial property buyers with the recent changes to Stamp Duty Land Tax (SDLT)

One of our key specialisms here at Senate Money is negotiating Commercial Mortgages for those wishing to purchase Commercial Property. Our knowledge of the market place means we can find the best funder for a client’s requirements. It’s still great news however, about the recent changes to Stamp Duty Land Tax (SDLT), which come into effect in 2017. Significant savings could result.

What are the Changes to SDLT?

From 17th March 2017 the government has reformed Stamp Duty Land Tax (SDLT) on non-residential property transactions, cutting the amount of tax for many businesses purchasing property.

Currently stamp duty operates on a much hated slab system, where one tax rate is collected on the entire transaction value. For example a business buying for £250,000 will pay 1% (£2500) in SDLT however if the buying price is just £1 higher the SDLT due will be three times as much at 3%. This system can lead to misrepresentations of commercial property prices in the market.  

The new rates have been introduced on a slice system, to mirror residential property, where SDLT becomes a percentage of the transaction value, depending on the tax band it falls within. In other words, it is a progressive tax, just like PAYE. The new rates will be as follows:

- 0% of the transaction value between £0-£150,000

- 2% between £150,001 and £250,000

- 5% above £250,000

The government will also introduce a new 2% rate for leasehold rent transactions where the net present value is above £5 million. These transactions are already taxed on a slice basis. All leasehold rent transactions up to £5 million will remain unaffected.

What does this mean for Commercial Property Transactions

The reform will deliver a tax cut, usually for smaller businesses purchasing less expensive properties, whilst ensuring businesses purchasing higher value properties make a more balanced contribution.

In numbers:

- 42% of commercial transactions will pay 0% Stamp Duty.

- Of those that do pay SDLT, 43% will pay less.

- A further 42% will pay the same.

- As a result over 90% will pay the same or less in SDLT

- Only 9% pay more SDLT

This is good news for commercial property buyers. In monetary terms, it means, for example that Stamp Duty on a Commercial Property Purchase of £400,000 would have been £12,000. Under the new system it will be £9,500. This is a saving of £2,500 and any saving is good news.

Save Even More With the Best Possible Commercial Mortgage

Getting the best possible commercial mortgage could help you save even more money than the changes to Stamp Duty Land Tax. Contact us or call us on 06745 443878 for an initial chat and view some of our testimonials.