The concession was announced by financial secretary Ruth Kelly during a Commons debate approving orders implementing the replacement of Stamp Duty on commercial property transactions from 1 December.
Kelly said the threshold would exempt a large number of leases, particularly for small and medium-sized businesses, and said the view emerged during consultations that the slab structure under which the whole amount of net present value came into charge when the threshold was exceeded would create distortions.
She said: ‘I accept that and, for that reason, propose to change the structure so that only the excess over the threshold would be taxable.’
It amounts to an effective cut in the tax of £1,500.
Other concessions include relief for commercial acquisitions of residential property by builders, purchase chain-breaking companies, in connection with relocating employees and some purchases from personal representatives of people who have died, with a warning that reliefs will be withdrawn in cases of abuse.
Kelly said it was ‘a bold step in modernising stamp duty’ which was ‘long overdue’.
But Tory spokesman Mark Prisk derided a complicated formula for calculating duty on ‘abnormal’ lease and protested the reform actually meant a stealth tax increase from £50m a year to £230m which would ‘restrain business investment and severely distort the property market by favouring short leases’.
Former Tory minister Stephen Dorrell warned: ‘The only thing the new set of taxes will encourage is the tax planning industry and the big accountants, who must even now be rubbing their hands with glee.’
Tory MP James Djanogly added: ‘This tax is the precursor to a massive Labour tax-raising exercise on property.’
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