Budget: Chancellor reforms stamp duty for commercial properties


The Government has reformed stamp duty for commercial properties by removing the ‘slab’ structure and replacing it with a system more akin to income tax.

In the 2014 Autumn Statement the Chancellor did the same thing for residential properties.

The change means that when a purchase passes a tax threshold, the higher rate applies to just the part that passes the threshold.

Giving his Budget today, the Chancellor 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, 98 per cent of homebuyers are paying the same or less and revenues from the expensive properties have risen. The IMF have welcomed the changes and suggest we do the same for commercial properties. That is what we are going to do, and in a way that helps our small firms.

“At the moment our small firms can pay just £1 more for a property and face a tax bill three times as large – that makes no sense.”

From midnight tonight, commercial stamp duty will have a zero rate band on purchases up to £150,000; a 2 per cent rate on the next £100,000; and a 5 per cent top rate above £250,000. There will also be a 2 per cent rate for those high value leases with a net present value above £5m.

There are transitional rules for purchasers who have exchanged but not completed before midnight tonight.

The Chancellor added: “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 for example, if you buy a pub in the Midlands worth £200,000 today you will pay over £8,000 in stamp duty. From tomorrow, you will pay just £3,000. It is a big tax cut for small firms all in a Budget that backs small businesses.”