Could Commercial Stamp Duty Change Under Andy Burnham?

Speculation about an Andy Burnham tax policy has been building since before he became prime minister, when he said he favoured replacing stamp duty land tax and council tax with an annual property tax of around 0.48% of a property’s value (double that for any additional dwellings) or a tax on the underlying land value.

A further possibility had also been floated involving the revaluation of council tax bands with the addition of further upper bands to create a kind of wealth tax on expensive dwellings and perhaps replace the idea of a “mansion tax’ that had been announced by the previous Chancellor Rachel Reeves in her 2025 Budget before she was ditched on 20 July 2026.

Burnham has however expressly ruled out any changes to SDLT in the Budget due on 28 October 2026. This stance may be because Downing Street does not want to frighten the property market in the way that Reeves did when she floated possible changes to property taxation ahead of her budgets in order to road test reactions.

Why commercial property deserves separate consideration

Most of the political discussion concerns residential property and council tax and not SDLT on commercial property. This is because commercial stamp duty operates differently and should not be caught by headlines about “stamp duty reform”. Historically there was little difference between the rates of SDLT on residential and on commercial property with the top rates on both being 4% above £500,000 but with a higher starting threshold for commercial property until 6 April 2011. On that date the top residential rate was increased to 5% and it has crept up steadily since then to a current top residential rate of 19%, while the top rate for commercial property has only been increased to 5%. Clearly, successive Chancellors have treated residential property as a cash cow while being unwilling to milk the commercial property market to anything like the same extent. This may be due to the fact that most commercial property other than farmland is liable to business rates which have increased by roughly 50% over the past 10 years.

Could a commercial stamp duty change become a revenue-raising target?

The Andy Burnham tax agenda faces significant fiscal pressures, with limited room around the major taxes due to the government’s 2024 manifesto promises not to raise the level of income tax, national insurance or VAT. That makes the taxation of property, wealth and land an easy target. Given that SDLT on commercial property has been kept at the same level for years a tax grab on commercial property cannot be ruled out.

The bigger question – reform rather than simply higher rates

In the longer-term the debate could shift from increasing SDLT on residential and commercial property to restructuring property taxation altogether such as to levy a land value and development tax. Property development taxes have been proposed and tried since WW2 in an attempt to capture the windfall gain created by the grant of planning permission but have not managed to endure with the last most serious attempt being the Development Land Tax which was scrapped in 1985.

Land value taxation and commercial property

Anyone designing a new land tax would do well to recall what Nigel Lawson said in his 1985 Budget when he scrapped DLT or Development Land Tax. According to Miles Gibson in his University of Cambridge paper on British development taxes since 1945, Lawson argued that DLT was “a particularly complex tax, which was introduced in response to the problem of soaring land values at a time of high inflation. Its chief practical effect is to discourage the bringing forward of land for development. This Development Land Tax disincentive effect will grow as the gap widens between the 60% rate of development land tax and a corporation tax rate which is on the way down to 35% … The net cost will be some £20 million in 1985–86 and £50m in a full year. That compares, incidentally, with a collection cost of some £5m a year. Development gains will, of course, continue to be subject to income tax, corporation tax and capital gains tax, in the same way as any other income or capital gains.”

Would reducing commercial stamp duty encourage investment?

This is a no-brainer because in my opinion reducing the level of taxation will almost always encourage investment by leaving more cash in the hands of investors and traders and by making the investment returns from commercial property more attractive.

Mixed-use property could become increasingly important

The mixed residential and non-residential property “loophole” continues to surprise me by having been allowed to persist for so long especially given that the presence of some non-residential property within a transaction can reduce the top rate of SDLT at the extreme from 19% to 5%. It would be relatively easy to change the law to simply apportion the relevant consideration between the residential and the non-residential parts and charge the residential and non-residential rates on the respective parts accordingly. It may be that the reason why this change has not been made is that roughly in parallel with the steady increase in the rates of residential SDLT, HMRC have waged a strong and pretty successful campaign through the tax tribunals to narrow the definition of non-residential property in the context of residential property acquisitions so that few “mixed-use” acquisitions actually succeed in paying only the 5% top rate although there have been some notable successes such as Suterwalla.

Commercial property transactions already requiring careful SDLT analysis

It should be remembered that commercial property transactions for SDLT include not only a straightforward freehold purchase of a commercial premises but also involve for example, linked transactions, lease premiums and rent, partnerships, corporate transactions, development arrangements, property portfolios and available reliefs. Therefore, a reform of the SDLT on commercial property will not necessarily be straightforward and should take into account all these different aspects of a complicated tax.

What should commercial property investors do now?

Frankly, until the Budget on 28 October 2026, and assuming the Andy Burnham tax agenda doesn’t shift beforehand through pre-Budget road testing, there is little that commercial property investors can or should do other than perhaps try to ensure that current planned transactions complete before then in order to gain the certainty of treatment under the current rules.

Feel free to contact me for further advice about this if you are concerned about a commercial stamp duty change or the taxation of property generally.