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Budget 2016 - Stamp Duty Land Tax on Non-Residential Property

24th March 2016

For purchases of non-residential property which complete on or after 17th March 2016, the way in which Stamp Duty Land Tax (SDLT) is to be calculated has changed from a slab system to a banded system such that tax is payable only on the amount of the purchase consideration falling within each band. However, where contracts have been exchanged before 17th March 2016, and are to be completed on or after that date, the purchaser may choose whether to have their SDLT calculated in accordance with the old rules or the new rules.

Under the old rules SDLT is calculated as below:

Purchase price

Rate

£0 to £150,000

0%

£150,001 to £250,000

1%

£250,001 to £500,000

3%

Over £500,000

4%

 

For example under these rules, upon a purchase of a non-residential property for £500,001, there would be SDLT of £20,000 due.

Under the new rules, SDLT will be calculated on the purchase of non-residential property as follows:

Chargeable Consideration

Rate

Up to £150,000

0%

Over £150,000 and up to £250,000

2%

Over £250,000 

5%

 

Taking the same example as above, SDLT due on the purchase of a non-residential property for £500,001 will be calculated as follows:

Chargeable Consideration

Amount

0% on the first £150,000

£0

2% on the next £100,000

£2,000

5% on the next £250,000

£12,500

Total SDLT due

£14,500

 

There are also changes to the SDLT charged on rent paid under a non-residential lease. A new additional band of 2% will apply where the net present value (NPV) of the rent is above £5 million.

 

NPV

Rate

Up to £150,000

0%

Over £150,000 and up to £5,000,000

1%

Over £5,000,000

2%

 

Fiona Cross