Good News for Small Businesses
The Chancellor announced a number of significant changes regarding commercial property in this week’s Budget.
Apart from the well documented changes to business rates, Stamp Duty Land Tax (SDLT) for non-residential properties has been restructured, echoing reforms made to residential stamp duty in 2014. For freehold transactions completed on or after 17th March 2016, SDLT will only be payable on the portion of the consideration which falls within each band, rather than tax being due at one rate on the entire value. There are also changes to commercial leasehold transactions but these only concern transactions with a Net Present Value over £5million. The changes will be of benefit to many small businesses whilst the British Property Federation, which represents companies such as developers and institutional investors, is concerned the higher top rate is likely to dampen regional growth.
Further good news for small businesses is that, from 1st April 2017, Small Business Rate Relief (SBRR) will double, meaning that businesses with a Rateable Value (RV) up to £12,000 will be entitled to 100% relief, with RVs up to £15,000 being subject to tapered relief. It remains to be seen whether this is sufficient to have a positive impact on our High Streets. From 1st April 2020 business rates in England will be re-rated with reference to the lower rate of CPI rather than the RPI. The Treasury have also indicated they will revalue properties every three years rather than the present five in order to reflect economic changes. Quite how they intend to manage this is unknown as the Valuation Office are already overstretched and the last 5 yearly revaluation, originally due in 2015, has been delayed until 2017!
Article written by Suzanne James BSc MRICS, Partner at Sheldon Bosley in our Stratford upon Avon office.