Sean Randall, Head of Stamp Taxes at KPMG UK, comments:
“After hitting the residential property market with multiple changes to taxes including stamp duty over recent years, today the Chancellor turned his attention to the commercial property market.
“There were no fewer than three announcements today that will leave the property market reeling. First, despite vociferous lobbying, the new stamp duty surcharge on purchases of ‘additional’ homes will apply to businesses. An exemption had reasonably been expected for ‘large-scale investors’. Second, the ‘slab’ system for commercial property transactions will be replaced with a marginal rate system with a new top rate that is 25% higher than its predecessor – 5% rather than 4%. And third, lease duty – stamp duty on new rental leases – will be ramped up. Leases with a net present value of rent over £5 million will suffer a new 2% tax rate – the previous rate was 1% for NPV over £150,000.
“The changes represent a significant tax increase for commercial property occupiers, developers, investors and dealers, and will prove disruptive to the market. Property companies in particular will be furiously reviewing investment decisions to check that the damage caused by the changes to the initial rate of return on each investment isn’t fatal, and rushing to exchange sale contracts before midnight to escape the tax hike. It’s going to be a long day in the office for some.”
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Frances Shennan, KPMG Corporate Communications
M: +44 (0)7584 202794
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