George Osborne's Budget contained some shocks on SDLT.

Generally increasing the amount payable on commercial property worth over £1.05m, but buried in the detail was a welcome announcement on the abolition of the CRC Energy Efficiency Scheme and some cause for concern around the tax deductibility of interest payments and taxation to be applied to offshore property developers.

A copy of the full Budget can be found here, and a copy of the BPF full analysis can be found here. Some highlights are below.

Stamp Duty Land Tax

Commercial Property - new rates applicable on and after 17 March 2016
  • SDLT will move to a slice system, so the rate is applied to the portion of the consideration which falls within each band. The rates applicable for freehold and leasehold premiums are:

£0 - £150,000 = 0%

£150,001 - £250,000 = 2%

£250,001 and above = 5%

  • There is a new SDLT rate applicable to rents paid on commercial/mixed leases to the extent the NPV of the rent exceeds £5 million. This also operates on a "slice" basis, and the current 1% and 0% rates remain in force.
  • Detailed explanatory guidance can be found here. If contracts are exchanged prior to 17 March 2016 but the purchase is completed on or after that date then, subject to some exceptions listed in the guidance, the purchaser can elect to apply the old or new rules of calculation.
Residential Property - new rates applicable on and after 1 April 2016
  • As proposed at Autumn Statement 2015, higher rates of 3% above the the current SDLT rates will apply to purchases of additional residential properties.
  • Purchasers will have 36 months both to claim a refund if they buy a new main residence before disposing of their previous main residence, or, to sell a main residence and replace it with another without having to pay the higher rates.
  • The higher rates will apply equally to purchases by individuals and corporate investors.
  • Detailed explanatory guidance can be found here. If contracts were exchanged prior to 26 November 2015 but the purchase is completed 1 April 2016 or after then, subject to some exceptions listed in the guidance, the old rules of calculation will apply.

HMRC's SDLT calculator has been updated and will show you the SDLT on any transaction under both the old and new rules.

This can be found here

CRC Energy Efficiency Scheme

This will be abolished from the end of the 2018-19 compliance year, meaning businesses will be required to surrender allowances for the final time in October 2019. Allowance prices for the remaining compliance years will increase in line with RPI. The Climate Change Levy rates will increase from 1 April 2019 to cover the cost to the government of losing the CRC payments.

Business Rates

  • CPI will become the new method of uprating business rates from 1 April 2020. This is something which the industry has long been calling for.
  • Government will issue a discussion paper looking at introducing more frequent (at least 3 yearly) property revaluations for business rates purposes.
  • Government will pilot Liverpool City Region, Greater Manchester and the Greater London Authority retaining 100% of business rates.
  • Small Business Rate Relief doubling will be permanent from 1 April 2017, and the thresholds will increase over time.
  • The threshold at which business rates in England are calculated using the standard multiplier will increase to properties with rateable values of £51,000 and above from 1 April 2017.

Tax deductibility of corporate interest expenses

  • Government will introduce rules for addressing base erosion and profit shifting through interest expenses from 1 April 2017 in line with the OECD recommendations.
  • These proposals will restrict tax deductibility of interest to between 10-30% of earnings. It is thought that the Real Estate Sector will be badly hit by these proposals and the BPF has stated that it will be working closely with the Treasury on the detail.

Offshore property developers

  • Legislation will be introduced to ensure that profits from trading in UK land are always subject to UK tax.
  • A new taskforce will be created to ensure tax on these profits is collected by identifying and investigating offshore businesses which try to avoid paying tax on profits and rental income from property development in the UK.


  • Crossrail 2 has been given the green light to proceed to the next stage, along with options being developed for HS3, the faster rail link over the Pennines.
  • Transport for London is invited to bring forward proposals on how it could capture a proportion of future land value increases around proposed local infrastructure projects funded by the public sector.

Residential Sector

  • Legislation will be brought in to charge inheritance tax on all UK residential property indirectly held through an offshore structure from 6 April 2017.
  • The PRS guarantee scheme will be extended until December 2017 to encourage long term institutional investment in the sector.
  • Lifetime ISAs will be introduced from 1 April 2017 for individuals under 40, allowing savings of up to £4,000 per year (up to age 50) with a government bonus of 25%. Funds can be used to buy a first home with the bonus at any time from 12 months after opening the account or can be withdrawn any time from age 60 for use in retirement. The limit for property purchased using Lifetime ISA funds will be set at £450,000.
  • The Starter Homes Land Fund prospectus has been launched, inviting Local Authorities to access £1.2bn of funding to remediate brownfield land to deliver Starter Homes.
  • Government is also to explore options to encourage private investment in low-cost home ownership.
  • The Help To Buy: Shared Ownership Prospectus will be launched in April 2016.
  • As announced on 27 January 2016, the 1% annual reduction in social rents will not apply to supported housing in 2016-17.
  • Government has announced a call for evidence to look into the process of buying a home with the aim of speeding it up and reducing the cost.
  • Capital Gains tax reductions announced in the Budget will not apply to chargeable gains on residential property.


  • Support is being provided to encourage more Garden villages and towns.
  • Measures will be brought forward to enable a more zonal "red line" planning system to give early certainty and reduce the number of stages developers must go through to get planning permission.
  • Preparation and adoption of Local Plans will be encouraged.
  • Use of planning conditions are to be streamlined to minimise delays, along with a review of the process whereby conditions are deemed to be discharged.
  • Statutory 3-month deadlines will be set on Secretary of State called-in applications.
  • Proposals to improve the visibility of information relating to options to purchase or lease land will be consulted upon.
  • Further compulsory purchase reforms will be consulted upon.
  • Details are to be announced of greater freedoms and flexibilities in England to support the deployment of mobile infrastructure, allowing taller, new ground based masts to be built.


  • Flood defence funding will be increased by more than £700m by 2020-21.
  • Insurance Premium tax will go up across all policies by 0.5% to 10% in order to fund this.

Key Contacts

Serena Glover

Serena Glover

Principal Knowledge Lawyer, Real Estate

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