Business owners looking to buy premises in Wimbledon Village have been dealt a stamp duty shock.
Chancellor George Osborne used his 2016 Budget speech to announce new stamp duty rates for commercial property.
Previously, stamp duty rates for business premises applied to the whole transaction value, with fees of 3% being charged for commercial property sold for between £250,001 and £500,000, and 4% above that figure.
But from now on the rates will apply to the value of the property over each tax band.
The new rates and tax bands will be 0% for the portion of the transaction value up to £150,000, 2% between £150,001 and £250,000 and 5% above £250,000.
Stamp duty rates for leasehold rent transactions will also change, with a new 2% rate on leases with a net present value over £5m.
Capital Gains Tax
And residential landlords in who are tempted to cash in on rising values in Wimbledon Village will be denied a capital gains tax cut announced by the Chancellor.
Residential property was excluded from a tax cut that will see investors in other types of asset benefit from the higher rate of CGT being reduced from 28% to 20%, while the basic rate will fall from 18% to 10%.
Institutional investors in new-build developments must now pay the government’s stamp duty surcharge on purchases of additional property.
From 1 April, an extra 3% levy will be applied to standard stamp duty rates on all purchases of property that is not intended to be the buyer’s main home.
Investors who bought 15 or more properties in one deal were previously exempt from this ruling, but the Chancellor has now reversed this decision.
New savings scheme for homebuyers
Homebuyers, on the other hand, have received some extra help from George Osborne.
The Chancellor used his latest Budget speech to turn the existing Help to Buy ISA into a new Lifetime ISA for savers aged under 40. This will continue to pay a 25% bonus to account holders saving towards their first home, but will also pay the government top-up if the saver holds on to the ISA until retirement.
However, the savings and bonus can only be used towards a deposit on a first home worth up to £450,000.
Other measures affecting the property market
The 2016 Budget also contained a number of other announcements affecting the property market in Wimbledon Village and London as a whole.
- Homeowners who rent out either their parking spaces were handed a £1000 tax break, which will come into force in April next year.
- Others who let their flats and houses as holiday homes using sites such as Airbnb will also be offered the perk as an incentive to declare their earnings.
- The government has unveiled its Starter Homes Land Fund prospectus and is inviting local authorities to access £1.2bn of funding to “remediate brownfield land to be used for housing”.
For more information on the 2016 Budget, click on the link below: