An overhaul of Stamp Duty on commercial property could provide greater incentives for first-time entrants to the hospitality sector, according to Colliers International.
The changes – announced by the Chancellor of the Exchequer, George Osborne, at Wednesday’s Budget – mean that Stamp Duty Land Tax (SDLT) for non-residential freehold and leasehold transaction will only be payable on the portion of the consideration which falls within each band.
This is different to the current system in which tax is due at one rate on the entire value of the transaction.
Peter Brunt, hotels director at Colliers said Osborne’s announcement had caught people in the industry “on the hop”.
He said: “The big issue is about Stamp Duty Land Tax. The hotels sector didn’t see this coming and will need time to collect its thoughts on how to approach the new rates.
“But the lower cost for properties below £1m will be provide a definite boost to first-time entrants to the market, who can now get their feet on the ladder slightly more easily.
“There will be a marginal reduction in the need for capital to enter the sector, but perhaps more importantly, what look to be changes benefitting small businesses in the business rate system will give greater profitability to help pay the bills and make it easier to achieve success. This means job creation and retention.”
He said for those in the sector where there are traditionally higher levels of part-time work, the raising of the threshold on taxation to £11,500 will also help. He claimed the Budget has been good news for small hotels, bed and breakfasts and most country pubs.
He added: “Businesses will pay no SDLT on purchasing premises worth £150,000 or less, 2 per cent on property with a value between £150,000 and £250,000 and 5 per cent thereafter. Previously they paid a flat rate.”