There is a temporary cut in Stamp Duty Land Tax (SDLT) from 8 July by raising the nil-rate band from £125,000 to £500,000 until 31 March 2021. The Treasury estimates that, as a consequence, around nine in 10 people buying a main residence will pay no SDLT.
Further details can be found on SDLT changes here: https://www.gov.uk/guidance/stamp-duty-land-tax-temporary-reduced-rates
If you purchase a residential property between 8 July 2020 to 31 March 2021, you only start to pay SDLT on the amount that you pay for the property above £500,000. These rates apply whether you are buying your first home or have owned property before.
You can use the table to work out the SDLT due:
- Property or lease premium or transfer value SDLT rate
- Up to £500,000 Zero
- The next £425,000 (the portion from £500,001 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%
From 8 July 2020 to 31 March 2021 the special rules for first time buyers are replaced by the reduced rates for additional properties
Higher rates for additional properties
The 3% higher rate for purchases of additional dwellings applies on top of revised standard rates above for the period 8 July 2020 to 31 March 2021.
The following rates apply:
Property or lease premium or transfer value SDLT rate
- Up to £500,000 3%
- The next £425,000 (the portion from £500,001 to £925,000) 8%
- The next £575,000 (the portion from £925,001 to £1.5 million) 13%
- The remaining amount (the portion above £1.5 million) 15%
New leasehold sales and transfers
The nil rate band which applies to the ‘net present value’ of any rents payable for residential property is also increased to £500,000 from 8 July 2020 until 31 March 2021.
The following rates will apply:
Net Present Value of any Rent SDLT rate
- Up to £500,000 Zero
- Over £500,000 1%
Companies as well as individuals buying residential property worth less than £500,000 will also benefit from these changes, as will companies that buy residential property of any value where they meet the relief conditions from the corporate 15% SDLT charge.
On the 1 April 2021, the reduced rates shown in the above tables will revert to the rates of SDLT that were in place prior to 8 July 2020.
We will keep you up to date with these and other measures as the Government releases further details. Please talk to us if you need any help during this time.
July 13th, 2020