Stamp Duty Holiday

Kathryn

On 8th July 2020 Rishi Sunak announced a temporary stamp duty land tax holiday that will last until 31st March 2021.

What do I need to know?

  • This only applies to residential properties.
  • This only applies in England and Northern Ireland; Scotland and Wales have their own versions of the tax which are not affected by this announcement.
  • The special rules for first-time buyers are suspended.
  • The nil-rate band for SDLT is increased to £500,000.
  • The increased nil-rate band will also apply to the net present value of rents payable for leasehold sales.
  • The higher-rate surcharge of 3% will still apply, but property investors and non-natural persons such as companies and trusts will benefit from the reduction in the basic percentage charged.

An example for the individual homeowner

SDLT for an individual purchasing a property for £350,000.  They are not a first-time buyer and are replacing their main home so the higher-rate surcharge of 3% does not apply.

Purchase before 8th July 2020:  

First £125,000 @ 0%

Next £125,000 @ 2%

Remaining £100,000 @ 5%  

The total SDLT charge is £7,500.  

Purchase between 8th July 2020 and 31st March 2021  

The SDLT charge is £nil as the property costs less than £500,000.  

An example for the first-time buyer

SDLT for an individual purchasing a property for £350,000.  This will be their first interest in a residential property so the special rules for first-time buyers apply.

Purchase before 8th July 2020:  

First £300,000 @ 0%

Next £50,000 @ 5%  

The total SDLT charge is £2,500.  

Purchase between 8th July 2020 and 31st March 2021  

The SDLT charge is £nil as the property costs less than £500,000.

An example for the property investor

SDLT for an investor purchasing a property for £350,000.  They will own more than one property after the purchase and are not replacing their main home so the higher-rate surcharge of 3% will apply.

Purchase before 8th July 2020:  

First £125,000 @ 3%

Next £125,000 @ 5%

Remaining £100,000 @ 8%  

The total SDLT charge is £18,000.  

Purchase between 8th July 2020 and 31st March 2021:  

The SDLT charge is £350,000 @ 3% which is £10,500.

Any Questions?

If you have any questions at all please contact me.

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