Stamp Duty Land Tax Holiday
Julia Madden, 7th May, 2021
Managing the risks and understanding what will happen if you miss the deadline...
You and your seller or buyer may be expecting your transaction to benefit from the current Stamp Duty Land Tax (SDLT) holiday in England and Wales. The current SDLT holiday for properties up to £500,000.00, will end on 30 June 2021. There will then be a further SDLT holiday for properties up to £250,000.00, until 30 September 2021. From 1 October 2021, SDLT will revert to the pre-holiday rates.
Before exchange, we will talk to you about completion dates and will warn you if the SDLT holiday deadline can not be met. But we may not know this until very late in your transaction. Any loss of your transaction or any extra SDLT costs that are incurred as a result cannot be claimed back from our firm or any other party. Please be aware of this when deciding to start your transaction or agree to exchange or complete.
The holiday only applies to transactions which actually complete in full on or before the above dates. It will not be sufficient to have simply exchanged contracts before the deadline. Full legal completion and the changing hands of the full price must have taken place on or before the deadline.
Also, you or your seller or buyer may be classed by the UK Government as a “foreign” buyer. That is someone who is legally resident outside the UK. If so, they will be liable to pay an additional 2% of SDLT on your purchase from 1 April 2021.
As a result of the current Covid-19 situation lots of aspects of the conveyancing process are taking longer than they did in the past. Local Authorities have reduced staff levels and less access to their records for search companies. This means search results taking longer to be issued. Lenders have high work loads and may have reduced staff levels due to illness. As such mortgage offers take longer to issue. There are many other aspects of the conveyancing process that are affected by Covid-19 in different ways and as such, they take longer.
Solicitors and Conveyancers currently have very high workloads due to a surge of property transactions all hoping to take advantage of the SDLT holiday. This workload inevitably slows down the conveyancing process. We have a full staff level and do manage our workloads carefully to ensure they are reasonable and enable us to offer a great service to our customers. Not all firms will be able to cope in this way and inevitably, this will lead to delays in chains.
As a result of the factors above and to delays outside the control of any conveyancer, average transactions times are now said to have reached 22 weeks. This could mean that transactions could very easily miss the SDLT holiday deadline. We can not guarantee that any transaction will be ready to complete in time to take advantage of the SDLT holiday.
Missing the SDLT holiday deadline may cause additional costs or losses and may mean transactions fall through at the last minute if it becomes clear that the SDLT deadline won’t be met. If you are entering into a transaction now, you must be aware of this risk and be prepared to either lose your transaction or have to pay the full SDLT rate. You can follow the link below to work out what the full SDLT sum would be if the deadline is not met:
SDLT Calculator – England: https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro
SDLT Calculator – Wales: https://gov.wales/changes-land-transaction-tax-nil-rate-threshold