From 17 March 2016, the rates will apply to the value of the property over each tax band, unlike the current system where they apply to the whole transaction value.

The Chancellor confirmed that these rates will be reformed to a slice system, so that SDLT is payable on the portion of the transaction value which falls within each tax band.

The measure changes the rules for calculating the SDLT charged on purchases of non-residential properties and transactions involving a mixture of residential and non-residential properties.

At present, for purchases of freehold, the assignment of an existing lease and for the upfront payment (premium) on a new leasehold transaction, SDLT is charged at a single percentage of the price paid for the property, depending on the rate band within which the purchase price falls.

The Chancellor George Osborne said: ''At the moment, a small firm can pay just £1 more for a property and face a tax bill three times as large. That makes no sense.

'This new tax regime comes into effect from midnight tonight. There are transitional rules for purchasers who have exchanged, but not completed contracts before midnight.

'These reforms raise £500m a year. And while 9% will pay more; over 90% will see their tax bills cut or stay the same.'

The new rates and tax bands will be:

• 0% for the portion of the transaction value up to £150,000;
• 2% between £150,001 and £250,000; and
• 5% above £250,000.

Buyers of commercial property worth up to £1.05m will pay less in stamp duty.

The measure is meant to provide a boost for small businesses considering property purchases, for example, if you buy a pub in the Midlands worth, say, £270,000, you would today pay over £8,000 in stamp duty. From 17 March 2016, the SDLT will be £3,000.

Stamp duty rates for leasehold rent transactions will also change, with a new 2% stamp duty rate on leases with a net present value over £5m.  These transactions are already taxed on a slice basis. All leasehold rent transactions up to £5m will remain unaffected.

Around 42% of commercial property transactions pay no SDLT at all due to the existing nil-rate bands.

Of the remainder that do pay SDLT, around 43% will pay less tax and a further 42% will pay the same.  As a result of these changes, over 90% of non-residential property transactions will pay the same or less in SDLT, with only 9% paying more.

These changes will take effect on 17 March 2016. For those transactions which have already exchanged contracts but not completed when the changes come into force, transitional rules will ensure taxpayers will not lose out.

‘Following the introduction of graduated rates of SDLT for residential properties, the same approach has now been adopted for commercial properties,’ says Mark Fielden, a tax partner at Kingston Smith.  ‘This is welcome news for small businesses looking to invest in new premises.’

The latest announcements follow significant changes to property tax announced in the last three Budgets, including the removal of interest rate relief on buy-to-let mortgages and an SDLT levy at 3% for second home and buy-to-let properties.