BUDGET 2016: From midnight on Wednesday 16 March, commercial property investors will see stamp duty land tax brought in line with that of residential. That was one of many property measures announced by chancellor George Osborne in the Budget 2016.
SDLT on commercial assets valued at up to £150,000 will stand at 0%, at 2% for assets valued at £250,000, and 5% on any property valued above that.
While the move may encourage smaller investors in the commercial property market, it was not widely welcomed by the property industry.
Melanie Leech, chief executive of the British Property Federation, said: “Commercial property investment can often act as the catalyst for regional growth and as the economy has recovered investment has been spreading out from London to the UK’s regions, but will now undoubtedly slow. The real setback in today’s announcement is that development in places like the northern powerhouse and Midlands’ engine will now be held back as a result of this out-of-the-blue raid on commercial property transactions.
“Over a decade ago, the government of that time decided to decouple the commercial and residential rates of SDLT recognising that the sectors were driven by very different factors and there was no logic in charging the same rates of SDLT on commercial and residential property. We can only hope that today’s announcement isn’t any unravelling of that logic.”
Another reform of business rates was also announced. The rates will now be based on RPI instead of CPI, the relief threshold will be increased to £15,000, and more frequent – at least three yearly – revaluations will be introduced. A full review of business rates is set to be released later this month.
Gerry Biddle, business rates consultant at Deloitte, said: “The government has responded to the loud calls for change from small businesses and major retailers, and the chancellor has accepted the need to link business rates to CPI, but not until 2020. Such a change could eventually lead to a significant loss of annual revenue increasing each year, which may in fact benefit large businesses over smaller businesses as they pay a larger proportion of tax.”
Further devolution, investment in infrastructure including HS3 and Crossrail 2, and a new saving mechanism to help the next generation get on the housing ladder were also announced in today’s Budget.
Click here to read the full Budget document.
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