Budget 2016: SDLT on non-residential transactions

Currently SDLT on non-residential transactions (i.e. those not exclusively involving residential property) is charged on a slab rate system using the following rates:

Consideration Rate
0 – £150,000 0%
£150,001- £250,000 1%
£250,001- £500,000 3%
Above £500,000 4%

 

In relation to new non-residential leases, SDLT is payable on the premium granted based on the rates above.  A separate SDLT charge may be payable based on the Net Present Value (‘NPV’) of the total rent payable under the new lease.  Currently these lease duty rates on non-residential transactions are 0% where NPV is £150,000 or less and 1% above £150,000.

From 17 March 2016, SDLT on non-residential transactions will be charged on a progressive rate system, as set out below, with SDLT payable based on the portion of the consideration which falls within each rate band.

Consideration Rate
0 -£150,000 0%
£150,001- £250,000 2%
Above £250,000 5%

For new leasehold transactions, SDLT will be payable based on the NPV of the total rent payable based on the following values:

 

NPV Rate
0 -£150,000 0%
£150,001- £5,000,000 1%
Above £5,000,000 2%

 

Where contracts have been exchanged but transactions have not completed before 17 March 2016 purchasers will be able to choose whether the old or new structure and rates apply.

This will impact the purchase of all mixed use and commercial properties in the UK other than Scotland, where exchange and completion takes place after 16 March 2016. Such acquisitions will be subject to the new SDLT structure and rates. For commercial properties costing more than £1.05 million the level of SDLT will have increased – for example the SDLT on the acquisition of a £2million office block will increase from £80k to £89.5k.