It has recently been reported that Chancellor Rishi Sunak plans to announce a 3-month extension to the Stand Duty Land Tax holiday in the Budget on March 3rd.
Currently, the SDLT holiday is set to finish on March 31st, 2021, with the proposed extension of the holiday to coincide with the end of social distancing in England and Wales by the end of June.
Initially, on 8th July 2020, Chancellor Rishi Sunak, announced a Stamp Duty Land Tax (SDLT) holiday to help Britain’s housing market following the coronavirus pandemic. The property tax threshold has been raised to £500,000 in a bid to make home buyers exempt from paying any SDLT.
What is SDLT?
SDLT is a form of tax that applies when buying houses, flats and other land and buildings in the UK. There are several different rate bands, and how much you pay depends on the price of the property you are purchasing, whether you are a first-time buyer and other personal circumstances of you and your spouse/civil partner.
How does the SDLT holiday work?
By raising the threshold, SDLT will only be charged on properties costing £500,000 or more. This will help buyers who have taken a financial hit during this coronavirus crisis.
What are the new purchase price bands?
If the SDLT holiday is extended, the purchase price bands will be:
- Up to £500,000 the SDLT rate is 0%
- £500,001 to £925,000 the SDLT rate is 5%
- £925,001 to £1.5 million the SDLT rate is 10%
- Over £1,500,000 the SDLT rate is 12%
The previous rules for first-time buyers are now replaced by the new reduced rates.
What about second homes and buy-to let properties?
If the SDLT holiday is extended, buyers of second homes and buy-to-let properties will have to pay 3% on top of the revised standard rates.
- Up to £500,000 the SDLT rate is 3%
- £500,001 to £925,000 the SDLT rate is 8%
- £925,001 to £1.5 million the SDLT rate is 13%
- Over £1,500,000 the SDLT rate is 15%
What does this mean for the housing market?
An official statement is yet to be announced and it is hoped if buyers save money on SDLT, property prices can stay at the same level as they will be more affordable. If the SDLT holiday is to be extended it is estimated over 100,000 transactions would benefit.
This is a general guide to the changes being implemented. If you would like any more information, need a quote for buying or selling a property, or require any specialist tax advice please contact our team on 01603 677077.
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