Stamp duty land tax – Budget 2016 changes

Although the changes in the Budget with regards to pensions were fairly light touch, the changes to stamp duty land tax will have more of an impact on SIPPs and SSAS. The changes impact commercial property purchases that complete from 17th March and will mean for the majority of purchases in a pension a reduction in the amount paid.

SIPPs and SSAS have long been used for their ability to buy commercial property and over recent months with stockmarkets being so volatile investors have continued to seek something they perceive as a safe haven. These changes will help those purchasing reasonable size properties to pay less tax on the transaction, leaving more in their pension to provide an income in retirement.

Threshold to tiered

The biggest change is  that we have moved from a threshold tax to a tier tax which means you will no longer see a sudden jump in the amount that has to be paid when the value goes over to the next level. This has previously been used as a negotiating point to keep the cost below the threshold.

Overall cost

Stamp duty land tax is calculated on the whole cost of the purchase and with commercial property this can often include a VAT charge. The VAT can usually be reclaimed after purchase but it is still taken into account when making the calculations. VAT could have pushed the value of the property into the next banding therefore adding a significant amount to the transaction cost, limiting what can be purchased.

The new tiers

Purchase Price (incl VAT)


£0-£150,000 Nil
£150,000 – £250,000 2% on this tranche
Over £250,000 5% on this tranche

Benefiting smaller purchases

Over the years the amount you can accumulate in a pension has continued to be restricted and these changes benefit purchases that are less than £1,050,000, just over the level of the lifetime allowance that will be in force from 6th April 2016. This just goes to show that this change ties in very well with pensions investments.