This article takes a brief look at the key property announcements and implications of the Spring Budget 2017 from a Commercial Property perspective.
1. Business Rates
The business rates revaluation takes effect in England from 1 April 2017, meaning that all non-domestic properties are given a new rateable value and the multipliers are revised. The effect of this revaluation is that from 1 April 2017, the rateable value will be based on the valuation date of 1 April 2015. Concerns were raised by small business owners that the revaluation process would result in unaffordable business rates that could not be absorbed by their small ventures. In response to these concerns, the government has agreed that there is scope to reform the revaluation process with more frequent revaluations to avoid the dramatic increases in business rates that the present system can deliver. Presently, the revaluation process typically occurs every five years. The government has announced that it aims to deliver revaluations at least every three years however deferred setting out its preferred approach until ahead of the next revaluation in 2022. The government has, however, introduced the following measures to help those businesses hard-hit by the imminent revaluation process:
- A cap on business rates bills for businesses losing Small Business Relief. Small businesses eligible for Small Business Relief include those who only use one property, and the rateable value of that property is less than £12,000 (increased to £15,000 from 1 April 2017). For those small businesses coming out of Small Business Relief, the government has committed to capping the increase in their business rates bills at either the transitional relief cap or £600 per annum, whichever is the greater;
- A £1,000 discount for all pubs with a rateable value of less than £100,000 on business rates bills in respect of the period from 1 April 2017 to 31 March 2018. 90% of all pubs will be eligible for this discount, which was introduced to recognise the valuable role that local pubs play in our communities;
- A £300 million fund provided to local authorities to deliver discretionary relief, to enable local authorities to assist individual cases hard-hit by the revaluation process in their area.
The government has therefore committed to providing a further £435 million cut in business rates targeted at assisting small business faced with the dilemma of unaffordable business rates bills.
2. SDLT
In relation to filing SDLT returns and making SDLT payments, HMRC has confirmed that the window for payment will reduce from within 30 days of the effective date to within 14 days of the effective date. The government has announced that the reduction in the filing and payment window will be delayed until after April 2018.
3. Disposals of Land in the UK
The ‘Profits from Trading in and Developing Land in the UK’ measure (announced in the 2016 Budget) was introduced to ensure all profits from dealing in or developing land in the UK, regardless of the residence of the party making the disposal, is charged to UK Corporation Tax or Income Tax. The measure applied to all disposals of property made on or after 5 July 2016, excluding those where the contract was entered into prior to 5 July 2016. The government has announced that it will amend this legislation so that all profits realised on or after 8 March 2017 will be charged to UK Corporation Tax or Income Tax regardless of the date the contract for disposal was entered into. The effect of this amendment is that all profits realised on or after 8 March 2017 will be subject to tax in the UK. This measure is likely to affect a small number of businesses only, mostly offshore property developers. These businesses should be aware that they will incur one off costs of familiarisation with the new rules and will pay higher tax on land disposals within the UK, bringing their tax bills in line with all other UK land developers.
If you have any questions or require further advice, please contact our Commercial Property department on 01642 356 500.
Please share the article
