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Commercial Stamp Duty and Business Rates Budget Changes 16 March 2016

Setting aside the startling proposed cut in Corporation Tax from 20% to 17% by 2020, the Chancellor has announced two other changes that will affect thousands of businesses.  Put simply;

COMMERCIAL STAMP DUTY CHANGES

Commercial stamp duty 0% rate on purchases up to £150,000,

2% on the next £100,000 and 5% top rate above £250,000.

This represents a considerable change and is believed, subject to final confirmation, to charge a percentage on each band, rather than the top rate being applied to the whole purchase price as at present.  The result should be decreased stamp duty bills for smaller transactions, but higher stamp duty for large ones. We calculate the crossover point at approximately £1.55M, where more tax will be paid under the new regime than under the old.

New 2% rate for high-value leases with net present value above £5m.

Effective from midnight, end of 16 March 2016.

SMALL BUSINESS RATES RELIEF

Annual threshold for small business tax relief to be raised from £6,000 to a maximum of £15,000, exempting thousands of firms. Different bands will likely apply in London.

Previously, a graduated pro rata reduction was available for businesses with Rateable Values between £6000 (100% relief) to £12,000 (Zero relief) so the changes represent a significant change for the smallest of businesses.