George Osborne has sought to help Britain’s small businesses by overhauling the stamp duty rates system on commercial property.
Some 90 per cent of small firms will see tax bills either cut or remain the same as a result of the reforms, with the Treasury calculating that £500mn a year will be raised from the nine per cent of businesses affected by higher stamp duty rates.
For the first time, the chancellor introduced a zero rate band for commercial stamp duty. Small businesses will pay zero per cent on commercial property valued up to £150,000, two per cent on the next £100,000 in property value and five per cent over £250,000. The reforms are due to come into effect from midnight on 16 March.
In his Budget announcement, Osborne said: “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.
“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 added.
According to managing director at tax consultancy Catax Solutions, Mark Tighe, the reforms encourage small business owners to buy commercial property. “Reduced stamp duty will doubtless drive demand in this key asset class in the months and years ahead.
“But the resultant increase in transactions, amongst both businesses and private individuals buying commercial property, will potentially cost billions as a largely unused tax relief is lost forever,” warned Tighe.
Small businesses appear the early winners of following Osborne’s eighth Budget announcement. Together with fresh measures to reduce tax avoidance and evasion, this year’s Budget will likely result in higher taxes for larger businesses whilst smaller firms are protected.
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