Rishi Sunak, the Chancellor of the Exchequer, announced a temporary Stamp Duty Land Tax (SDLT) ‘holiday’ on the 8th of July 2020. Although the measure is only temporary, the expectation is that the SDLT ‘holiday’ will instil confidence in the housing market and encourage buyers to take advantage of the reduced rates of tax.
SDLT is a tax paid by people buying properties in England and Northern Ireland. The amount payable is based on a number of factors, such as the purchase price, whether it’s the buyer’s first property or an investment.
Prior to the commencement of the ‘holiday’ as soon as it was announced on the 8th, ordinarily, if you purchase a residential property, you would have to pay SDLT at the following rates:
- Purchase price up to £125,000 – Zero
- More than £125,000 but less than £250,001 – 2%
- The next £675,000 (the portion from £250,001 to £925,000) – 5%
- The next £575,000 (the portion from £925,001 to £1.5 million) – 10%
- The remaining amount (the portion above £1.5 million) – 12%
First time buyers are exempted from SDLT on residential properties purchased for up to £300,000.
This announcement by the Chancellor is part of the Government’s response to the impact of Coronavirus on the economy. The temporary relief will be in place until the 31st of March 2021. During this period, there will be no SDLT payable on properties purchased for up to £500,000 in England and Northern Ireland, whether you are a first time buyer or not.
In practical terms, this means an average savings of £4,500 for every buyer. This is encouraging news for numerous people across the country and we have already seen an increase in the number of our clients, either seeking to step onto the property ladder for the first time or adding to their existing portfolio.
Properties over the £500,000 threshold will still attract SDLT and the tax payable will be calculated based on the purchase price and the buyer’s circumstances. For a better idea of the Stamp Duty payable on a property you are interested in buying, simply use the Government’s SDLT calculator.
To take advantage of this temporary relief and save a substantial amount which could then be better utilised by furnishing your new property, for example, you will need to complete your purchase before the 1st of April 2021, when the SDLT holiday comes to an end.
If you have any questions on how the SDLT holiday impacts you or if you would like us to guide you through the legal process of buying a property, please contact any member of our Residential Property Team. Or simply email us at firstname.lastname@example.org.