Commercial stamp duty has been cut by the chancellor George Osborne in the 2016 Budget, while the government is set to go ahead with plans to increase a duty on buy to let properties and second homes.
The stamp duty on commercial property will have a zero rate band on purchases up to £150,000; a two per cent rate on the next £100,000; and a five per cent top rate above £250,000.
Osborne also said there will be a new two per cent rate for those high value leases with a net present value above £5m.
The reforms come into effect from midnight tonight and the chancellor claims the changes will raise £500m a year.
Not all firms will see a reduction however, with nine per cent paying more though over 90 per cent will see their tax bills cut or stay the same.
If you buy a pub in the Midlands worth, say, £270,000, you would today pay over £8,000 in stamp duty. From tomorrow you will pay just £3,000. It’s a big tax cut for small firms. All in a Budget that backs small business.
However, there were no new changes to stamp duty rules on residential property.
Osborne said: "Just over a year ago, I reformed residential stamp duty. We moved from a distortive slab system to a much simpler slice system. And as a result 98 per cent of homebuyers are paying the same or less, and revenues from the expensive properties have risen. The IMF welcomed the changes and suggest we do the same to commercial property."
Existing plans to hike buy to let stamp duty has been slammed by some businesses.
Lawrence Hall of Zoopla Property Group said: "The Chancellor’s decision to go ahead with plans to introduce a further 3% increase in Stamp Duty on buy-to-let properties and second homes is the latest in a series of short-sighted policies aimed at the property market."
The plans to cut the commercial stamp duty have also been criticised by some property groups.
Melanie Leech, chief executive of the British Property Federation, said: “Commercial property investment can often act as the catalyst for regional growth and as the economy has recovered investment has been spreading out from London to the UK’s regions, but will now undoubtedly slow. The real set back in today’s announcement is that development in places like the Northern Powerhouse and Midlands’ Engine will now be held back as a result of this out-of-the-blue raid on commercial property transactions.
Meanwhile, small business rates have been cut by the chancellor, excluding up to 630,000 small firms from paying any rate at all.