The Chancellor, George Osborne’s Spring Budget was announced on the first day of the Cheltenham Festival and taking a look at the winners and losers of the budget was always going to be interesting to see how he planned to address the slower economic growth than was predicted. If I had been a betting man I might have lost my shirt and be feeling the chill of the wind that we have had these last few days! Happily, business is one of the budget winners. At a time when new business start-ups are at record levels there is good news for small businesses. The Centre for Entrepreneurs, which runs the governments Start Up Britain campaign says that since 2011 annual start up rates have increased from 440,600 to a record breaking 581,173 in 2014 and were expected to be in excess of 600,000 during 2015. One of the first questions that we are asked during a viewing of a commercial property and especially for a start-up business, is, “What is the Rateable Value and what will the Business Rates be?” From April 2017 small businesses that occupy property with a Rateable Value of £12,000 or less will pay no Business Rates, currently this relief is available only if you are a business that occupies a property with a Rateable Value of £6,000 or less. It is estimated that up to 600,000 firms will no longer pay Business Rates with a further 250,000 paying less than they are now.

At a time when fewer properties are on the market, causing prices to be pushed upwards, it is encouraging to see that landlords and owners of second properties disposing of them will pay less Capital Gains Tax, a tax on the gain you make when you sell an asset that has gone up in value. From April 2016, the higher rate of Capital Gains Tax is to be cut from 28% to 20% and the basic rate from 18% to 10% although the surcharge paid on carried interest, the share of profits or gains that is paid to asset managers, is set to rise by 8%. The planned scheme to make tax payable in the year that profit was earned has been put on hold for a couple of years. Perhaps more landlords will be encouraged to realise their assets and more property will filter onto the market, easing the upward pressure on prices.

There is also good news for purchasers of commercial property up to £1.05 million as they will pay less in Stamp Duty despite changes to the rates and tax bands. The new rates and tax bands will be 0% up to a value of £150,000, 2% between £150,001 and £250,000 and 5% above £250,000. Stamp Duty Land Tax is also payable on a lease and is calculated on the Net Present Value (NPV) the total of the rent for the term of the lease, inclusive of VAT if applicable, yes, SDLT is payable on VAT! The tax becomes payable on NPV’s in excess of £1,000 per annum at 1% and rises to the new rate of 2% on NPV’s in excess of £5,000,000. It is understood that the majority of transactions will pay the same or less Stamp Duty Land Tax.

Fortunately my sweet tooth doesn’t extend to sugar filled drinks and I should be able to avoid the Sugar Tax, although if that is extended to biscuits I could be in trouble, and I can toast St Patrick’s Day with a pint of Guinness where the tax has been frozen on alcohol.

Mark Jones

Commercial and Land Surveyor at Walton and Hipkiss.