In more detail

The changes will affect purchases and leases of commercial properties, including mixed commercial and residential properties, with an “effective date” on or after 17^th March. Two changes have been announced.

The first change is to the way in which SDLT on the price payable on the transfer of a property or on the premium for a lease is calculated.  Currently SDLT is charged on the whole price or premium depending which rate band it falls in. The maximum rate is 4% where the price or premium exceeds £500,000. The rule will change such that SDLT will be charged at the rate applicable to the portion of the price or premium falling within each rate band as follows.

The second change is to the rates at which SDLT chargeable by reference to rent on the grant of a lease is charged.  SDLT is already charged at the rate applicable to the portion of the net present value of the rent that falls within each rate band. However, the rate bands will change. An increased top rate will be introduced where the net present value of rent exceeds £5m, as set out below.

Grandfathering where contracts have already been exchanged

Where contracts were exchanged on or before 16^th March, it will usually be possible to elect that the current SDLT rates rather than the new rates will apply.  Where contracts have been varied or assigned or there is a sub-sale on or after 17^th March, or an option or pre-emption right is exercised on or after 17^th March, the ability to elect for the current rates to apply will be restricted and specific advice should be sought.