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29 November 2016

Budget 2016: Commercial stamp duty (SDLT) surcharge changes

SDLT on commercial premises has been changed to a “slice” system rather than a “slab” system, in the same way as residential SDLT was changed last year. 

The new rates will be: 

  • 0%  on values up to £150,000
  • 2% on the amount from £150,001 to £250,000
  • 5% on any portion above £250,000

Very high lease rent transactions will pay a higher rate of 2%  where the net present value is over £2million. There will also be transitional provisions for contracts which have already been exchanged but not completed.

The Chancellor’s figures say that as a consequence all freehold or lease premium transactions up to £1.05 million will pay the same or less in SDLT.  Clearly therefore the consequence for purchasers of properties above that threshold, is that their SDLT due will rise, and will rise steeply as prices increase, as the “slice” system will have less effect the higher the price level.

Both purchasers and vendors of the higher priced properties will therefore feel the pinch as inevitably buyers will have to factor the increased SDLT into their budgets and this will have a knock on effect on the price they are prepared to pay to their sellers. Today’s news will come as a blow to investors and developers in larger and more expensive properties. 

At the other end of the scale, business who are looking to invest in smaller commercial properties will find that their SDLT hit is significantly reduced by the graduated rates coming into effect for properties with a value of up to £1.05m.  This, combined with a reduction in business rates, will be welcome news for smaller businesses wanting to take the plunge and invest in properties.

If you have any questions or concerns about the 2016 Budget and its implications for you our your business, please contact Sarah Morley on