The first revenue neutral Budget of this parliament threw up a few surprises and aftershocks but let us focus on the important points from a property perspective!
The most significant change to the non-residential property sector involves the calculation of SDLT, a new tiered system has been introduced for freehold transactions, lease premiums and assigned leases.
The new bands introduced for all transactions completing on or after 17 March 2016, are –
|Up to £150,000||0%|
|Over £150,000 and up to £250,000||2%|
Buyers of properties purchased for below £1.05m will benefit from this new system, the government estimates that this represents approximately 76% of freehold transactions. It’s safe to say however, this will raise significant levels of revenue for the Exchequer from the hot London and South East commercial property market.
The Chancellor has taken flak from some quarters of the business world for his ‘National Living Wage’ initiative and in an attempt to further sweeten this pill he took the surprising decision to announce a further cut in Corporation Tax by the end of the parliament. As part of last year’s Budget, George Osbourne announced that Corporation Tax would fall to 19% for the start of the 2017/18 tax year and then to 18% in 2020. The Chancellor has now set in motion a reduction of the CT rate to 17% for 2020 – this would take the UK from the lowest CT rate in the G7 to the lowest in the G20 by the end of the decade!
Finally, the Budget addressed how non-UK resident persons are subject to tax on profits arising from trading in, or developing for sale, UK land. Profits arising from a trade carried out by a company will be subject to corporation tax if the trade comprises dealing in, developing or disposing of UK land, this is irrespective of where the trade is carried on. There will be equivalent changes for income tax.
Please do contact us if you would like to discuss anything mentioned here or for a general capital allowances chat.