Budget 2016: Property Market Assesses Chancellor’s Announcement
Chancellor George Osborne has announced details of a new Stamp Duty Land Tax reform focused on the commercial property market.
The Chancellor introduced a new tiered system of Stamp Duty Land Tax for commercial property, in a move that Mr Osborne said was inspired by the success of similar reforms in the residential property sector.
Stamp duty for commercial property buyers will now have a 0% charge on the first £150,000, a 2% charge between £150,001 and £250,000, and a 5% charge on the above £250,000, with the changes set to come into operation form midnight tonight.
The Chancellor also addressed the Stamp Duty Land Tax reform announced in the Autumn Statement, which saw a new 3% Stamp Duty surcharge on property purchases made buy-to-let investors or buyers of a second home introduced. George Osborne confirmed that the levy will apply for both small and larger investors.
This new policy resolves the concerns that previously been highlighted with the newly reformed Stamp Duty Land Tax, which created a disparity between small investors, affected by the 3% surcharge, and larger corporate buyers, who were not affected.
The new start date for these reforms was also confirmed by the Chancellor as being the April 1st, as had previously been announced. This undercut predictions from many that the deadline would be delayed and could mean that the high investment activity experienced by the property market over the last few months is likely to continue in the run up to the deadline.
Elsewhere in his announcement, Osborne also mentioned that from April 6th 2016, Capital Gains Tax rates will also be cut. This will allow people to earn more profits over their assets. The higher rate of Capital Gains Tax will be cut from 28% to 20% and the basic rate from 18% to 10%. Crucially, the new policy will not apply to those selling residential property.
Following last year’s Budget and Autumn Statement, today’s announcement has been seen as a reprieve for the buy-to-let market, with the Chancellor electing to focus on other areas in his task to cut £4bn of government spending.