Stamp Duty Land Tax (SDLT) holiday announced
Oliver Williams, 7th July, 2020
The Chancellor, Rishi Sunak, has announced changes to the Stamp Duty Land Tax regime in the UK.
UPDATE - 8 July 2020
It has been confirmed that from 8 July 2020 to 31 March 2021 the threshold for SDLT on residential properties is now £500,000 and will affect first time buyers as well as those who have already owned a property. The new rates are shown in the table below:
| 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% |
Whilst this will not eliminate the 3% SDLT paid by companies buying residential property or purchases of second homes it will increase the thresholds slightly in line with the above. The new rates will now 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% |
In terms of SDLT paid on rents under residential leases the threshold has also been changed so no SDLT is payable on the Net Present Value up to £500,000.00. Given the low rent of most residential leasehold properties this should have very little impact.
No changes have been made for SDLT due on Commercial Property transactions were the initial rate remains £150,000.00
Original blog post - 7 July 2020...
Whilst there are currently no confirmed details, the Chancellor, Rishi Sunak, has revealed that he will shortly announce changes to the Stamp Duty Land Tax regime in the UK.
In a bid to help support the economy following easing of the COVID-19 lockdown measures, the Chancellor is expected to announce an increase in the residential property Stamp Duty threshold from £125,000.00 to £500,000.00.
The new measures are expected to be implemented in the Autumn budget in October.
If announced, this will mean property buyers will not have to pay SDLT on the purchase of a residential property below £500,000. For purchases in this bracket, SDLT is currently paid at a rate of 2% of the purchase price between £125,001 and £250,000.00 and 5% on any portion above £250,001.
It should be noted that first time buyers already benefit from SDLT relief whereby the threshold is £300,000.00 with 5% SDLT being due on any purchase over £300,000.00 up to a limit of £500,000.00. Purchase of property over £500,000.00 do not benefit from this relief.
Whether or not the Chancellor intends to increase the relief only for first time buyers or for all residential purchases is unknown at this time.
It is currently also unclear whether these new measures will affect commercial property purchases, under which the SDLT threshold is currently £150,000.00, or the so-called “3% rule” charged on purchases of second homes and the purchase of any residential properties by companies.
We look forward to the Chancellor’s announcement providing further clarity on if and how these expected new measures will be implemented.
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