Significant change to stamp duty
March 16, 2016
Today’s budget represents the most significant change to stamp duty on commercial property for a decade. While changing from a slab to progressive structure will be welcomed, reducing distortion around the bands, the top rate rising to 5% could cause headaches for the higher end of the market. Properties over £1.05m will experience a substantial increase in the rate of stamp duty, which could subsequently slow transaction levels. The chancellor expects to raise £0.5bn from this move, but it will be interesting to see whether he meets this target given the fiscal drag caused by increased tax.
Residential property investors expecting an exemption from the 3% stamp duty on additional homes will be disappointed to learn they need to purchase six or more properties in bulk to escape the surcharge. Over this limit they’ll be subject to commercial property tax rates, which are still favourable despite today’s increase. This could encourage developers to cater for landlords looking to buy in clusters.