Finance Bill 2016: 15% SDLT Rate Relief for Commercial Use

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The 15% SDLT rate relief for property letting and development is being extended to also include use as a business premises, or development or redevelopment for the purposes of a qualifying property rental business or commercially run trade. The measures to extend the 15% SDLT rate relief were included in the first version of the Finance Bill published on 24 March 2016.

This version of the Finance Bill 2016 includes measures to extend the property letting and development relief so that the 15% rate does not apply to higher threshold interests acquired exclusively for one or more of the following purposes:

  • Use as business premises for the purposes of a qualifying property rental business. However, the business premises must not give rise to income consisting entirely or predominantly of excluded rents;
  • Use for the purposes of a “relievable trade”. A “relievable trade” is one that is run on a commercial basis, with a view to profit; and
  • Development (or redevelopment) either for:
  • resale in the course of a property development trade; or
  • exploitation as a source of rent or other receipts, with the exception of excluded rents. This takes place in the course of a qualifying property rental business or use as a business premises (as described in more detail in point 1 above), or use as a relievable trade (as described in point 2 above.

These measures apply to land transactions which have completed on or after 1 April 2016.

These measures differ and are less restrictive than the reliefs proposed in the draft legislation published in December 2015, which envisaged a new relief from the 15% rate for higher threshold interests acquired in the course of a trade, for the purposes of converting the building for use other than as a dwelling, or for permanent demolition.

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