Budget 2016: What’s in it for conveyancers?
Chancellor George Osborne delivered his eighth budget today with several measures cutting taxes for businesses, tweaks to the previous residential stamp duty reforms and wholesale reforms for commercial stamp duty.
Corporation tax will be reduced to 17% by April 2020, and the Treasury has confirmed that movers who buy a home before selling will have 36 months to claim a refund on their 3% surcharge rather than 18 months.
The Chancellor also announced the exemption for landlords with 15 or more properties has been removed – a move called for by the Council for Licensed Conveyancers amongst others, but decried by many as a bitter blow to the emerging Build to Let sector, which includes many pension funds.
George Osborne also announced £700 million in additional funding for flood defences, which would have been welcomed by many a year ago. Osborne also announced that 600,000 small businesses will be taken out of business rates – something the treasury administers but will be paid for in the end by local councils.
The Chancellor also announced a new “Lifetime ISA” which will enable those under 40 to save £4,000 per year until they are 50 with a government bonus of 25% on withdrawal, which can be used for house purchase. The new ISA will replace the “Help to Buy” ISA launched in November, by 2019.
During his speech, George 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% 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. So that’s what we’re going to do – and in a way that helps our small firms.
“At the moment, a small firm can pay just £1 more for a property and face a tax bill three times as large. That makes no sense. So from now on, commercial stamp duty will have a zero rate band on purchases up to £150,000; a 2% rate on the next £100,000; and a 5% top rate above £250,000.
“There will also be a new 2% rate for those high value leases with a net present value above £5 million. This new tax regime comes into effect from midnight tonight. There are transitional rules for purchasers who have exchanged, but not completed contracts before midnight.
“These reforms raise £500 million a year. And while 9% will pay more; over 90% will see their tax bills cut or stay the same. So, 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.”
He continued: “At present small business rate relief is only permanently available to firms with a rateable value of less than £6,000.
“In the past I’ve been able to double it for one year only. Today I am more than doubling it, and I’m more than doubling it permanently.
“The new threshold for small business rate relief will raise from £6,000 to a maximum threshold of £15,000. I’m also going to raise the threshold for the higher rate from £18,000 to £51,000.
“Let me explain to the House what this means. From April next year, 600,000 small businesses will pay no business rates at all. That’s an annual saving for them of up to nearly £6,000 – forever.
“A further quarter of a million businesses will see their rates cut. In total, half of all British properties will see their business rates fall or be abolished altogether.”