In addition to the 3% additional SDLT on residential propertytweaks to rule on companies buying residential property and accelerated payment deadlines for payment of property tax, the Chancellor has today announced major changes to stamp duty land tax on commercial property, with effect from midnight (16 March).

Freehold purchases or premiums

Commercial SDLT will move from the slab rate method of charging to a slice rate basis, as follows:

Click here to view table.

Rent on leases

This will continue to apply on a slice basis on the net present value but there are now three bands:

Click here to view table.

The rules in relation to premium being charged at a minimum of 1% where the rent is over £1,000 (i.e. resulting in no nil rate band on the premium) will no longer apply.  This means that both the net present value and the premium will have the benefit of the nil rate band.

These changes will apply from midnight tonight, but there are transitional provisions for those properties or leases that have exchanged or substantially performed but not yet completed.  In such cases, the tenant or purchaser can elect that these changes shall not apply to them.  This is done by entering the amount of SDLT payable under the old rates under box 14 of the SDLT return.

Those contracts that have been exchanged or substantially performed before 17 March 2016 will still be caught, however, if on or after 17 March 2016:

  • there is a variation to the contract, or an assignment of rights on or after 17 March 2016;
  • the transaction is effected in consequence of the exercise of an option, right or pre-emption or something similar; or
  • there is an assignment, sub-sale or other transaction where a person other than the tenant or the purchaser is able to call for a conveyance.

The SDLT calculators on HMRC’s website are yet to be updated so a manual calculation is required.